CryptoLogic Inc. (CRYP-$24.57) is a leading software developer to the global Internet gaming market.
In our view, the Company is in a win-win position. Should legislation introduced by Massachusetts representative Barney Frank to repeal the unpopular UIGEA become law, CRYP would benefit handsomely.
| Description | Stock Symbol | Position | Purchase Date | Price | Cost |
| Blue Nile | Aug 50 puts | 20 | 05/29/07 | $1.60 | $3,280.00 |
| CryptoLogic, Inc. | CRYP | 300 | 06/08/07 | $24.27 | $7,293.81 |
| Provident Energy Trust | PVX | 500 | 06/08/07 | $11.81 | $5,917.99 |
Provident Energy Trust (PVX-$11.88) is the only Canadian Energy Trust to combine upstream oil and gas production in both Canada and the United States with Canada’s second-largest midstream natural gas liquids businesses.
The Company’s upstream production reflects a geographically diverse footprint, from predictable producing regions in the western Canadian sedimentary basin to operating crude oil wells and natural gas facilities in Southern California, west Texas, and Wyoming. Production is approximately 95 percent oil and five percent natural gas. U.S. operations give Provident long-life reserves and an excellent platform for future growth.
Consolidated per-barrel operating costs are estimated to be below $5.00 per b.o.e. at Capitol’s producing field.
In addition, Provident calculates the Capitol Energy purchase will increase the Company’s total reserves life index (RLI) by 10 percent to 13.6 years. RLI is a simplified representation of the number of years of oil & gas reserves remaining if production remained constant at current rate(s) of production.
Midstream is a business with long-life physical assets (plants, pipelines, storage facilities, etc.) that complement Provident's upstream production business units.
In our view, the integration of upstream and infrastructure assets offers investors a sustainable yield-play (of 11 percent) with long-term value potential.
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I have previously been involved in GIGM which also deals with online gaming services. Do you think there is a good chance of this law being repealed? What is your expectation of the overall US demand for online gaming should regulations be loosened?
ReplyDeleteZach: With this do-nothing Congress, I am doubtful that Barney Frank's legislation has much chance of getting more than a hearing on the House floor, forget the Senate. Odds are probably better if Democrats sweep both Houses by a bigger majority in 2008, for they eye online gaming as a 'cash cow' -- read TAX dollars to fund social programs.
ReplyDeleteOutside chance of gaming bill being attached as a rider to some other spending bill--say military funding :)
International community is none-too pleased at official US policy. Gaming ban--contrary to what the preachers promulgate from their pulpits--violates several int'l trading accords, including WTO.
Funny how the same folks that call online gaming "evil" salivate at the thought of powerball or lottery ticket revenues in their states!
SIZE of market is huge. According to a report issued in 2005 by the U.S. General Accounting Office, global revenues from Internet gambling were projected to exceed $5 billion in 2006 year, with 50 to 70 percent of that revenue from U.S. customers.[prior to ban]
Global online gambling revenue is projected to rise to more than $24 billion by 2010--excluding US players!!!!!!
Best--
David J Phillips, Publisher
I started watching CRYP when I saw that Mohnish Pabrai bought a large position. The numbers look great. I only see two red flags that are keeping me on the sidelines:
ReplyDelete- They seem to have (or have had) a lot of unhappy customers. e.g. http://cryptologicmafia.com
Are these claims legit? Are the execs mentioned on this site still at CRYP? In either case, do they have significant liability risk?
- CRYP has a new CEO as of 4/07. Have they said why this change occurred (and is the explanation plausible)? To what extent can we assume that the new CEO will continue the success?
Are you aware of the Canadian Government's new law to tax business trusts as corporations rather than as pass-through entities? This is a major factor in the valuation of Provident Energy Trust. I would not own any of the Canadian trusts now.
ReplyDeleteI have previously posted on my thoughts regarding the Canadian government's intent to tax income trusts as corporations. No. 1: it is a phase-in plan that takes hold in 2011. No 2: this government, like Bush the Junior, has made so many blunders since taking power that it is gradually losing all of its political chips. A lot can happen in four years. Plus, I bought in AFTER the market discounted the planned intent.
ReplyDeletei agree with the legislation which aims to ban credit cards as a payment method for online gambling of any sort... and i think it should be enforced worldwide – not just in America. In fact, gambling with a credit card should be banned full stop. Not just on the internet. It’s a no brainer when you consider you are placing somebody else’s money on an uncertain event happening, with the aim to recoup more than you invested. Chance and credit do not mix well in my opinion, and continuing to allow it would only contribute further to negatively affecting the high levels of personal debt many citizens today find themselves in. I do however, think that the prohibition won't work; or at least it won’t be received well amongst gamblers - i mean what’s the point in banning a credit card payments made on an online poker game, for example, but not online sports betting? Slightly hypocritical no? I mean how can you allow someone to participate in online horse racing betting, but not put any money on a hand of texas hold’em poker? both activities involve a large degree of chance, and neither are guaranteed to yield financial return.
ReplyDeleteWhat really infuriates me is that the minority of irresponsible gamblers [those paying with someone elses money!] have now ruined the fun of online betting for everyone else - those like me who pay with money they actually have in their bank!!
At least for the Americans there is always the free online poker games!