Interview: Managing director of energy technology research at Ardour Capital Partners
>> crude oil rose 7% in the session. let’s get more on the story. walter nasdeo joins us, managing director of energy technology research at ardour capital partners, joining us to look closer at crude. it’s not just crude, but across the board. i want to start our conversation, given the rally today in natural gas, gasoline, crude oil, do you think those numbers are justified?
>> no, i think they’re ahead of themselves but, again, the environment has gotten so fractious that it’s difficult for these prices to get to a comfortable level so what we’re seeinggating is as katrina settled down and we looked at the damage, all of a sudden rita comes in and we don’t know where that will lead to and there’s uncertainty as far as the distribution of the oil economy.
>> what are you hearing from traders and clients that give us a better indication of why there was a surge today when the forecast for rita is not the same as the forecast there was for katrina.
>> that’s true. we do have other things going on around this with the interest rates. we don’t know where that’s heading right now. also, with opec meeting and uncertainty around exactly what it is they’re going to do as far as supply goes so―and then everything comes back around to what is the level of refining that’s available both in the opec space but also over here. katrina did significant damage to our refining assets and that’s something that we don’t have a complete handle on when they’ll get back on line.
>> what are you telling clients in terms of where prices are headed in the next few weeks?
>> we hope everything settles back down and gets into a comfort level and we expect that comfort level to be $60 and $65. that’s not to say that if another storm comes in or another environmental issue pops up, that it can’t pop over $70 but we certainly would expect it to settle back down into the $60 to $65 range.
>> no surprise today that energy stocks were the only pocket of strength in the s&p 500. energy stocks now more than 10% of the s&p 500. we haven’t seen that in over a decade. your universe of coverage is more the electric company and power cell companies.
>> true.
>> not―these stocks surged for a while but many of them are down substantially year to date. why is that?
>> well, again, it comes back around to an issue of execution. a lot of these companies are developmental. and what happens in these situations is that the spotlight is pushed over to these alternative energy and producing type companies because of what’s going on with the pricing of our traditional energy sources so we see pockets of solar, which is getting a lot of exposure right now. some of the superconducting companies, power companies and things like that are getting people looking at them right now because of the uncertainty and other aspects of the energy grid.
>> are you anticipating that the stocks will start rising? you do have a buy pretty much across the board for many of these names and we’ll get into picks. so are you anticipating stocks will rise?
>> we certainly do. simply because there’s a need for it right now. and the markets are getting better defined than they have been in the past. as that happens and these companies understand the markets that they are well suited to go into, the whole business and business models start to make more sense and these companies seem to have better reception from the investing public.
>> what’s your top pick in this area?
>> we like a small company called thatcon, a power electronic company that makes inverter and power electronics that go into solar cells and fuel cells and things like that so it feeds into the market itself. it’s not a power producer. we also like --
>> before you talk about another one, what’s the biggest risk for satkahn?
>> that the other markets go forward. there’s a lot of exposure there. they sell into the hybrid automobile market . they sell uninterruptible power supply so they go into a lot of areas so the major risk is execution at the company level and also that the markets continue to develop as they’re projected to develop now.
>> do you personally own that?
>> we do. we --
>> the company owns?
>> indeed.
>> we have 30 seconds and give us another name.
>> i like quantum, we do not own it. it’s a company that plays in the fuel cell and hydrogen market but work with general motors. they don’t make the fuel cell but a lot of the fuel lines and systems that go into the automotive, hybrid automotive.
>> walter, thanks so much for joining us. walter nasdeo, managing director of energy technology research at ardour capital partners. after the break, we’ll look at nike. shares with their biggest gain in two years. bob bowden is following the trading activity and the reason behind the surge.
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has called for a voluntary evacuation. the storm, forecast to strengthen into a hurricane today or tomorrow and could reach the texas coast by saturday. crude up throughout the trading session, in response, ending 7% higher. double-digit gains across the board for other energy morphs today, natural gas climbing to a record high, one of the biggest moves among commodities around the world. oil playing out in stocks today with declines across the board for the major indexes. let’s get the story. the latest potential hurricane to threaten oil production in the gulf of mexico. su keenan joins us with details.
>> this is the 17th storm of what has been a very active hurricane season. rita formed in the bahamas over the weekend and is now, as you said, aimed at the florida keys. with winds gusting above 60 miles an hour, it’s expected to reach hurricane strength by late tonight. early predictions from the national hurricane center take rita on a track to the central or north texas gulf coast by late this week. refco’s marshall steeves says that could threaten more refineries and after katrina’s grand jury to the gulf, estimates show it will take until the end of the year for the area’s oil and natural gas supplies to approach normal levels. steeves says this, combined with the approaching winter weather, made natural gas futures one of the biggest commodity movers in the world today.
>> that’s the concern here, namely, that we’ll have cold weather particularly in the early going in the november to december period and that will really whittle down that supply in storage that we have and i think that frankly depending on how much damage rita does, we could be looking at nat gas prices above $10.
>> mark waggoners even -- saysine though opec is meeting to discuss quotas, concern about rita dominates trading.
>> opec more of a gesture than anything else.
>> everything will focus on the hurricane and will it get stronger? where tell hit? will is hit where other refineries are?
>> several companies such as shell and chevron evacuating workers from the gulf. opec members agreed to maintain current production quotas. the cartel’s president says they’ll decide tomorrow whether to pump an additional two million barrels a day.
>> our extra capacity, we are putting it in the market , without changing, there will be more to the market .
>> additional barrels will have to come from saudi arabia which does not pump the kind of oil most refiners need.
>> news, as well, katrina-related news after the bell today. procter & gamble reaffirmed its first-quarter profit forecast saying sales growth will outweigh the impact of katrina. katrina costing the company one to two cents a share. it says profit will be in the range of 75 to 76 cents a share. former tyco chief executive dennis kozlowski and former chief financial officer, mark swartz, sentenced to 81/3 to 25 years in prison. the judge ordering them to pay restitution and fines. allan dodds frank was in the courtroom and joins us now.
>> 58-year-old dennis kozlowski and 45-year-old mark swartz asked for leniency but neither admitted guilt or showed remorse before being sentenced to a minimum of 8 1/3 years to prison in the biggest corporate looting case in history. they were sentenced on 22 counts involving multi-million dollar thefts from tyco, led away in handcuffs. the judge, in addition to giving them prison time up to 25 years, ordered shareholder restitution more than $134 million and imposed heavy fines. for kozlowski, the fine is $70 million and for swartz, whose pay was approximately half of kozlowski’s, the fine is $30 million. outside of court, kozlowski’s attorney was asked if he was upset about the judge’s decision to remand the men to prison immediately.
>> obviously, and we’ll apply for bail but i don’t want to comment further than that.
>> what happened to your client right now, is he in custody?
>> yes, he is.
>> where will he be won’t?
>> that’s up to the bureau of prisons.
>> will he be ok?
>> he’s a courageous person but it’s adverse.
>> assistant manhattan district attorney owen heimer said the defendants had stolen more than $150 million in hidden bonuses and cost tyco shareholders another $450 million by trading stocks illegally. kozlowski slipped by cameras on the way to the hearing beginning with the prosecutor saying the men deserve stiff sentences. the prosecutor called the former tyco chief the “worldwide symbol of cleptrocity by management.” during the hearing, it was disclosed that the securities and exchange commission may file a multi-million dollar accounting fraud case against tyco for actions that occurred while kozlowski was in charge from 1996 to 2002. the company said the charges did not involve its current financial reporting and will not require restatements. both kozlowski and swartz are expected to serve time in maximum security prisons.
>> thanks so much. a long road to today covering the story.
>> three years.
>> talking about the oil effect today, how it played out in the stock market . deborah kostroun followed that trading activity and files this report.
>> the dow jones industrial average saw its biggest loss in a month as tropical storm rita may disrupt energy markets and hurt corporate profits and many of the energy markets still reeling from katrina. those companies most affected by rising energy lower today -- retail, autos and transports lower. energy stocks, the best performers. we have the fed meeting tomorrow with the latest check on interest rates. most traders believe that interest rates will rise by quarter percentage point. what we did see, crude oil, up 7% on the day. year to date, it’s up 55%. gasoline up 14%. it is up 88% so far this year. and natural gas, another big gainer, 14%, just in today’s session. it is up a whopping 106% so far this year. you saw with that 7% increase in crude oil having an impact on many of those oil stocks, exxon and chevron coming in at record highs. oil services and refiners, all higher. the natural gas index coming in at a record on the day. remember, the gulf of mexico produces 1/3 of the nation’s oil and 1/5 of natural gas. alternative energy stocks like coal coming in at record highs in the session. consol energy closing lower. gold, the commodity, once again hitting a 17-year high. we saw the index trailing off a little bit but the surge in energy costs renews concern about the pace of inflation. that gold index at one point at its highest since january of 2004. gold stocks, however, getting a little bit lower. industries most affected by fuel costs, the worst performers in the s&p 500 so far this year and once again, worst performers on the day. retail and many of the transports all lower. i’m deborah kostroun at the new york stock exchange, for bloomberg news.
>> bloomberg has learned that comcast is bidding for susquehanna pfaltzgraff cable tv business. people familiar with the matter would not say how much comcast is offering but say the business could be worth as much as $800 million. buying it would boost comcast’s operations in pennsylvania and eastern states. comcast is competing with a bid from a management-led group. susquehanna is a family-owned firm and began as a pottery maker 200 years ago and sold the pfaltzgraff business to lifetime brands two months ago. the federal communications committee says it may use excess phone company fees to pay for the planned $211 million in katrina relief funds. telephone carriers may be the ones helping to pay the bill, according to the f.c.c. commissioner jonathan adelstein.
>> we do have to pay for what we put out there and one of the ideas is to maintain the current level of contributions, actually scheduled to go down a little bit. we’re talking about keeping it level so that we have money for this unanticipated problem.
>> the fees are currently at 10.2% and were suppose to drop to 9.9% of long-distance revenue. the telecommunications agency does not expect push-back from phone companies. there may be a vote on the issue as early as this week. after the break, we’ll talk oil.
