Archive for October, 2005

Merger

Thursday, October 27th, 2005

SpaceDev and Starsys have signed a merger agreement, which is interesting to me because I used to be invested in Spacedev. If you look at the 5 year chart it’s up about 50% and has easily outperformed the broader market. It’s in an interesting market and has cool aims (affordable space travel) but the financials are not compelling unless you’re convinced this industry is going to be big. I imagine it will be, very long term…

And info on the merger:

Under the terms of the merger agreement, Starsys, a private Colorado corporation with headquarters in Boulder, will merge with and into a newly-created, wholly-owned subsidiary of SpaceDev. SpaceDev will pay approximately $9 million, which is broken down into $1.5 million in cash and $7.5 million SpaceDev common stock at the effective time of the merger, subject to adjustment as provided in the merger agreement. SpaceDev will also pay off at closing approximately $4.6 million of Starsys debt and forgive a $1.2 million loan from SpaceDev to Starsys. Following the merger, Starsys shareholders may also be entitled to receive, based on the achievement of certain performance criteria for each of the fiscal years ending December 31, 2005, 2006 and 2007, additional earnout consideration valued at up to approximately $19 million, with approximately $1 million in cash and $18 million in SpaceDev common stock. The number of shares issued will depend on both the achievement of the performance criteria and the prevailing stock price at the time of measurement. Current holders of Starsys common stock will become holders of SpaceDev common stock following the merger. The merger agreement is subject to a number of conditions including but not limited to the effectiveness of a registration statement for the stock to be issued and approval of the shareholders of SpaceDev and Starsys.

Oil declines

Thursday, October 20th, 2005

U.S. light crude oil futures slid 43 cents, or 0.7 percent, to $61.98 a barrel in electronic trading. The market’s three-day losing streak has shaved off 3.7 percent.

U.S. data shows a large increase in crude inventories. The cause is believed to be weaker demand as people drive less.

There is no consensus from analysts regarding the future. “The bears need only final confirmation that Wilma will miss the western Gulf of Mexico in order to challenge support at $60,” consultancy PFC Energy said in a report. We may find out if they are correct because it seems that Wilma will miss the areas important t the oil industry.

As for the non-bears? Other analysts said tightening supplies of fuels such as heating oil, which fell last week but remain higher than this time in 2004, could spell higher prices as the Northern Hemishere approaches winter, when global demand peaks.

“If a normal or colder-than-normal U.S. East Coast winter were to be thrown into the equation, the situation might become fairly critical,” said analysts at Barclays Capital.

Weather people seem to be predicting a slightly colder than normal winter in the US and a very cold winter in Europe so we may find out if they are correct.

Of course it may turn out that both are correct and that oil will decline a couple of more dollars in the next week or two but then rise sharply if a cold winter increases demand for oil.

Dealing with credit card debt

Monday, October 17th, 2005

Here’s a market Watch article with advice on dealing with credit card debt now that new bankruptcy laws make it more difficult for people to start over.

Basically, people can try to deal directly with creditors, use a credit-counseling agency, or work with a debt-settlement company. From the article, none of these 3 options sounds appealing as each has major drawbacks. I still say it’s shameful that the new laws punish people who have fallen on hard times due to illness and subsequent job loss.

Really it just goes to show you that having a job is rarely the way to financial freedom. For most people losing their job means losing their way of life. For business owners and investors, a job isn’t necessary. For example my main business is network marketing and I am a professor at Cathoic University. I do this because i believe I can help students, not because I ned the money.

When the university decided to replace all non-tenure track professors who had been with the university more than 3 years in order to save money, several of my colleagues realized they were in trouble. I felt bad for the students since the university is saving money at their expense but I’m not worried about my own situation.

Anyway, my point is that employees are not well looked after in America or in most other countries and when hard times come it’s the employees who suffer. The business owners and the investors tend to come out all right so why not join us?

Carefully picking the right credit cards for your personal needs, by picking from the various credit card offers out there, can help keep you out of debt by making sure you have the best credit cards you can get.

REITs on the decline

Sunday, October 9th, 2005

It’s hard not to notice the recent declines of Annaly and Impac Mortgage Holdings, particularly since I’m invested in IMH. Of course, businesses in this sector borrow funds to buy securiti, making them vulnerable to interest rate hikes. Annaly Chief Executive Michael Farrell said that “during the tightening phase of an interest rate cycle our cost of financing will rise faster than the yield on our assets.”

On Tuesday, the FED will decide whether to to raise interest rates to 3.75 percent.

“When the Fed stops increasing rates, MBS consumer mortgage REITS should react well,” PiperJaffray analyst Robert P. Napoli said in a note to investors, adding that he expects the Fed to stop raising short-term interest rates in mid-2006 at 4.5 percent. “It is possible the Fed could take a break due to Katrina, but we believe the tightening cycle is not yet complete.”