Hyperdynamics Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of profitless wildcatter Hyperdynamics (NYSE: HDY  ) popped as much as 10% earlier this morning. They've slipped a bit since, but are still hanging onto a 7% gain in a mostly "red" market.

So what: As far as I can tell, there are only two legs supporting today's surge. One, oil prices are up about 2% in today's trading. It's anybody's guess which way they move tomorrow (or 15 minutes from now, for that matter.) Still, last night Jim Cramer set up a second leg of support beneath Hyper-D, giving "bulls" the all-clear to "speculate" on the stock in hopes of further oil price rises.

Now what: Well, that sounds like great advice to me. I mean, what could be better than buying shares in a profitless, revenue-less company seeking oil in the wilds of the Republic of Guinea? Sure, the company could go bust before it extracts a drop of black gold. But it's so much more interesting than investing in a boring old business like ExxonMobil (NYSE: XOM  ) , which you know is just going to be consistently profitable, year-in and year-out. I mean, where's the fun in that?

I jest, of course. My advice: Ignore Jim Cramer, and avoid Hyperdynamics. There are better bargains out there, and better ways to make money, with less chance of going bankrupt.

Will Hyperdynamics bulls prove Rich wrong? Add the stock to your Watchlist and find out.

Fool contributor Rich Smith holds no position in any company mentioned. Click here to see his holdings and a short bio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (12) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 24, 2011, at 1:30 PM, davelfla wrote:

    Another bash piece by the fool. Rich, can you find Guinea on the map? Do you know who the democratically elected president is? Do you know that the minister of mines used to work for HDY?

    Yes, this is a speculative company - but it is one with no debt and enough money in the bank to do what it has to do to locate oil in an unexplored area smack dab in the middle of multiple successful hits to the north and the south.

    It is lead by a team of world class oil men who worked for those boring companies you would rather own. And they will be drilling in six months or less.

    If you wait for HDY to hit oil, you will probably instantly lose 5 bags out of the 10 it could run. Your choice.

  • Report this Comment On May 24, 2011, at 1:49 PM, LondonPorter wrote:

    Have you even investigated the financial position of the company?

    If you had, you would have discovered they have about twice the amount of liquid, available funds to complete their announced drilling program.

    I can't find logic in your analysis.

  • Report this Comment On May 24, 2011, at 2:23 PM, foolsdiligence wrote:

    I'm confused. As an exploration company, HDY is not producing oil, yet you claim a 2% rise in oil prices boosted HDY 10%.

    Did you know they have in excess of $150M in the bank for their initial drilling campaing? Are you aware that's better than $1 a share?

    Did you know Institutional ownership has risen dramatically, (25M shares) in the 1st quarter of the year and that the majority of those shares were bought at or above $5?

    Did you know HDY is in line to get listed on the Russell 2000?

    Did you know anything about this company?

    How many shorts are you panicing over? Gawd your drivel panic posts every time HDY regains ground back to the $5 range is so transparent that only a fool would be blinded by it.

    Who are you a shill for, ShortsAreUs?

  • Report this Comment On May 24, 2011, at 2:24 PM, OrgonGuy wrote:

    I was an early adopter of cassette tape players in 1968 when my friends told me that 8-track tape was here to stay.

    Ten years ago I remember the cries "Why invest in Apple when you know Microsoft is going to be consistently profitable?"

    I suppose that back in the day it was said "Why invest in Henry Ford's contraption when you know buggy whips are going to be consistently profitable?"

    If you are seeking an interesting, speculative, oil investment with huge upside potential, then HDY is worth researching. However, if you are interested in following the herd with a safe, dividend-paying, oil stock then by all means check out XOM. The two have little in common.

    My advice: Decide on your investing style and always do your own Due Diligence.

  • Report this Comment On May 24, 2011, at 2:30 PM, foolsdiligence wrote:

    You better cover your foolish shorts. Climbing strong towards the close.

    Wonder what you'll write when the 3D results are announced? I bet it'll sound something like "please please please sell your shares cheap, we got caught by the short hairs again."

    For those who don't know, this is the list of recent firms who see HDY as good value just in the 1st quarter of this year:

    BLACKROCK GROUP LTD

    STATE STREET CORP

    SUSQUEHANNA

    DISCOVERY CAPITAL

    KLEINHEINZ CAPITAL

    ROXBURY CAPITAL

    HODGES CAPITAL

    CITADEL ADVISORS LLC

    REVELATION CAPITAL

    VANGUARD GROUP INC

    DLS CAPITAL

    WEINTRAUB CAPITAL MA

    CAISSE DE DEPOT

    AMERIPRISE FINANCIAL

    CHARTER OAK PARTNERS

    FIRST NEW YORK SECUR.

    PINE RIVER CAPITAL

    ESSEX INVESTMENT MAN.

    SCHWAB CHARLES INVEST.

    CALIFORNIA PUBLIC EMP

    CREDIT SUISSE AG/

    DEUTSCHE BANK AG

    BLACKROCK FUND ADVIS.

    LMR MASTER FUND LTD

    MARSHALL WACE NORTH

    MORGAN STANLEY

    DYNAMIS ADVISORS

    COMMERZBANK AKTIENGE

    MADISON STREET PARTN.

    RUSSELL FRANK CO

    IFC HOLDINGS INC

    BLUEFOOT PARTNERS

    DRIEHAUS CAPITAL MAN

    INVESCO LTD

    HELIOS ADVISORS LLC

    GOLDMAN SACHS GROUP

    ING GROEP NV

    CITIGROUP INC

    KNIGHT CAPITAL GROUP

    SPOT TRADING L.L.C

    J P MORGAN CHASE & C

    FIC CAPITAL INC

    ARROW INVESTMENT ADV

    and more . . . .

    INSTITUTIONAL Holdings Summary

    Total Number of Holders 84

    % of Shares Outstanding 28.84%

    Total Shares Held 44,861,707

    An increase of 25M+ shares . . . and climbing rapidly

    http://www.nasdaq.com/asp/holdings.asp?symbol=HDY&select...

  • Report this Comment On May 24, 2011, at 2:42 PM, xlordluckx wrote:

    Honestly, I never knew Motley Fool was so entirely owned by private interests until I started closely following HDY. It's so blatantly spun towards the short sellers (in this case) that an argument could be made Rich Smith having some type of cognitive deficiency making him unable to find value, VALUE, in the Market.

  • Report this Comment On May 24, 2011, at 3:20 PM, hatingfluffools wrote:

    Wow you most certainly sound bitter. I've always wondered, do you guys actually get paid to write these short, uninformative, bash rants? If so, good for you! You're stealing money from some idiot. Why would it surprise you that HDY is climbing back from oversold status? Still, it's trading 15% below the recent secondary. A climb to at least that level would not be shocking considering they've got 3G results coming soon as well. You are truly a fool if you think people buy stocks such as these based on earnings, pe, and such. People buy stocks like this for a homerun. They know the risk involved and feel it's worth it for the potential return. You've never had a 10 bagger, have you? Nope, didn't think so. Now please go back to your XOM, PFE, DUK and knitting class, be sure not to J-walk, and always stay below the speed limit. Thanks for your concern.

  • Report this Comment On May 24, 2011, at 3:22 PM, HDYFAN wrote:

    MF you are too funny with your HDY related stupidity. Don't like it? Don't buy it. As if we didn't know HDY is not EXXON, yet.

  • Report this Comment On May 24, 2011, at 4:34 PM, thirdcoast wrote:

    There is a THIRD LEG

    Tune in to Mad Money tonight and hear HDY CEO Ray Leonard.

    6PM and 11PM Eastern

  • Report this Comment On May 24, 2011, at 7:17 PM, idahogeo wrote:

    I'm not sure this is grand short seller conspiracy at work. These guys are pretty good at finding solid returns for relatively low risk.

    No, I'm thinking you're all getting played. If I had a cubicle at the TMF, I'd start an office pool taking over/under bets on how many indignant comments I could elicit with negative pieces on HDY or SIRI and positive pieces on YONG.

  • Report this Comment On May 27, 2011, at 11:50 AM, jsw72756 wrote:

    No response yet from Mr. Smith. Too embarrassed

    or no cojones?

    If it were worth two minutes of your valuable time to pen this piece, and some folks actually read & responded, couldn't you find another minute to

    reply?

  • Report this Comment On May 28, 2011, at 1:56 AM, thirdcoast wrote:

    Out of all the stocks to follow what are the chances you get HDY bashing headlines with positive NBL recs TOGETHER each time?

    http://caps.fool.com/search/solr.aspx?q=hdy+nbl&source=i...

    HDY a $.5M company and NBL a $10.25B company. Why together like this in fool articles?

    NBL low balled HDY in previous LOI negotiations and were left with nothing but spite....looks like they found some low budget journalism here at the fool to try and bash down HDY's valuation.

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