short selling, page-19

Cato you're turning into WebSpyder with your profound statements and trading focus! IMO, the big risk with KAR (other than the *teeny* question of drilling to establish whats in the ground..) is the next CR which will have to happen in the next 12 months - and probably in H1 of 2013. I reckon they may go for >$100m (they key reasons I was disappointed they couldn't get more cash up front from PR - even in exchange for another 5% of Santos) which if the SP doesn't put on another buck or two in the meantime will probably mean dilution of 20-25m shares. So far one of the metrics in which KAR has really outperformed (and something Swanny and other LT investors rightly put a lot of weight in) is shares on issue. But to have to do the next CR at prices significantly below those 4 years earlier would be disappointing and would start make me question whether KAR is perhaps slightly overreaching at the margin - eg. WA 482P two year work program for instance. Shame really because in a different market KAR would be richly rewarded for its aggressive portfolio building and would be widely touted as another WPL.