maverick = no real future....lol..., page-9

Paul

My 2 cents worth......

Agree with your comments about putting forward an alternative argument to be shot down with no constructive debate. I would have to say MAD has been probably the most constructive forum I have been a part of on HC though compared to others I have been involved in.

Your concern about MC/SP versus earnings today looks to be pertinent to a stock if it was a blue chip or close to it, but to look at this alone is not what the market is doing with a stock like this. MAD is not alone in this approach.

You could argue that MAD is a little speculative and therefore the SP is a little inflated (when looking purely at earnings today), but based on the strategy and management of that strategy to date there is no reason to be anything other than optimistic that the strategy will be successful.

Apply the SP/MC versus earnings theory to many others in the O&G world and you will see that MAD is not much different to all of them...in the valuation approach taken.

The difference with MAD is that they make money, so they have cash flow to support their strategy.

They have a good infrastructure base to support their strategy.

They have substantial reserves with much more acreage yet untested.

They always under promise and over deliver.....this is very important as it is not the norm in O&G. Management at MAD are the best I have been involved with.

There is plenty of literature to support that MAD has less speculation in it's SP compared to the industry. So, IMO I think the SP is deflated when using the basis used to value other O&G stocks.

My view is that with your theory, no one would buy stocks in O&G (KAR is a great example to test your theory bouncing from $2 to $11 all on reserves). There is always some speculative component, but MAD management have taken a path that has de-risked that speculative component significantly.

Cheers......