Sunday, August 19, 2012

ATPG - Finally Bankrupt

Well it's official.  ATPG Oil & Gas files for Chapter 11 bankruptcy protection.  Here's the link:

http://phx.corporate-ir.net/phoenix.zhtml?c=123846&p=irol-newsArticle&ID=1726749&highlight=

For those with any history on my blog, I wrote some very negative things about ATPG back in 2010.  The company was way, way over leveraged and the clock finally ran out.  What I did run into was a firestorm of controversy from so called "value investors" who thought ATPG was a bargain.  One commenter said it was worth $90/share.  I was lectured by many on the "value" in ATPG. 

One fellow said I didn't understand the economics of "reinvestment" (since that is somehow different from "investment").  He was full convinced he was going to make "ridiculous excess gains" at the expense of the ignorant (myself included). 

The math behind financial statements isn't hard, the problem is we often look at them with glasses that distort reality.  Those glasses ignore facts that don't align with what we want to see. 

Anyway, here are some links from my previous blog post (in order):

http://canadianvalueinvesting.blogspot.ca/2010/11/atp-oil-and-gas-some-comments.html

I posted the same article on Seeking Alpha, check out the controversy in the comments section. 

http://seekingalpha.com/article/235574-why-i-d-avoid-atp-oil-and-gas

http://canadianvalueinvesting.blogspot.ca/2010/11/atpg-caught-longs-with-their-pants-down.html

http://canadianvalueinvesting.blogspot.ca/2010/11/atpg-final-comments.html

http://www.gurufocus.com/news/116641/margin-of-safety--downside-risk


Looking back at those posts, I am still amazed at how strong the cult following for ATPG was.  I had a ton of comments on those above posts telling me where I was "wrong".  I'm still surprised at those who argued with me that ATPG had earned a profit. 

Devon Shire (aka CanadianValue & aka Swizzled)

Clearly this guy has no idea what he's talking about.  I see that he has now changed the name of his blog to be the same as mine.  It's pretty low of him to try and steal traffic to his blog.  I have tried to email him (through several sources) to see if he'll change it, but so far no reply. 

We had some lengthy debates since I started my blog and so far he's batting 0 for 2.  IF YOU HAVE FOLLOWED HIS ADVICE, YOU WOULD HAVE LOST MONEY.  

I find it amazing that he now charges for an investing newsletter, mainly targeting small to mid cap oil and gas.  If anyone reading this subscribes to his newsletter, please email me a copy and I'll gladly review his recommendations. 

Anyone who knows me understands how much this stuff burns me.  The vast majority of investment advice, professional or not, is worthless.  The people who listen to them deserve what they get, however, the so called advisor still keeps the fees.  The mutual fund industry is the worst. 

So what have I learned from this whole experience?  First you must often stand alone and stick to your principles in the face of intense opposition.  Facts are facts, don't ignore them.  The vast majority of "value investors" on the internet are useless.  Often these people read one misguided individual who in turn repeats the same nonsense and the cycle is repeated until a whole mass of "investors" on the internet believe their own story (I wonder how many of them actually read the ATPG annual reports and financial startments). 

On days like this I am reminded of a quote from Warren Buffett. 

The market, like the Lord, helps those who help themselves.  The market, unlike the Lord, does not forgive those who know not what they do. 


Best Regards,

Kevin


Disclosure: None. 

2 comments:

  1. I think that your attack on Mr. Shire is not really fair. You claim a score of 2-0, but perhaps you are just lucky.

    I checked Shire's blog and he sold out his position in ATPG on June 11, 2011, and explained why he had no interest in having any further positions in the ATPG. So eventually he came to agree that ATPG was not a good investment, because the story changed. Fair enough. Yet you have given the impression that he remained an advocate of ATPG to the very end when that is not at all the case.

    Then, checking the Alexa ranking on his blog and that of yours, it is a little silly to think that Shire is trying to steal traffic from your blog. Nuff said.

    I currently consult both your blog and Shire's because I found the back and forth between the two of you on PBN/PBG interesting and helpful to make decision whether to invest. Whether I will ultimately make money on the positions I have taken remains to be seen because frankly, the Petrobakken story is far from over yet.

    It is probably best in the area of blogging about investing to take a more magnanimous approach. I wrote some ideas on September 30, 2011, when PBN was at $6.40. You commented on my blog and said that I could lose it all on PBN. While your analysis was interesting, PBN has since greatly improved its balance sheet and is up 113% since I wrote that blog. On that note, I read Devon Shire, who among others, correctly stated that PBN had numerous options to fix their problems, and I decided based on that that Mr. Market had become overly pessimistic.

    Does that mean you don't know what you are talking about and I do? Or was I just lucky and in a year or two Petrobakken is also going to go bankrupt like ATPG? Or that sometimes, we investors, using our knowledge and skill will make good or lucky decisions, and the market and the timing will go our way, and sometimes, despite using the best information available to us, we will lose money on positions?

    For the record, I am a DIY investor, and I am personally happy with my success in investing.

    Thanks Kevin for your blog. I often disagree but as I said, it helps me to make more confident decisions. Cheers, Peter Dunn

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  2. Hi Kevin,

    I know you are not a fan of ATP equity, clearly because they are way too leveraged. However, with the bonds trading at $26.30 last time I checked do you see opportunity here in a restructuring?

    Thanks.

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