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Msg  4750 of 13357  at  4/7/2010 8:31:44 AM  by


Latest from Badiali

 Pretty sure these folks read our posts, themes are pretty familiar...
Latest from Matt Badiali of Stansberry & Assoc

After a rough couple of weeks, Interoil (NYSE: IOC) shares are rebounding nicely.

Company officials recently visited Japan with a New Guinea diplomatic mission to work out the details of the Mitsui partnership. According to the New Guinea newspaper The National, Mitsui will fund 100% of a condensate stripping plant. The financing is in place and construction should begin soon.

This is another one of our milestones and is extremely important. The plan is for the plant to go into production by 2012. That means the company will publish reserve data within the next 18 months or so. Reserves were always the big target for short sellers. Since nearly 10% of the free-trading shares are sold short, we stand to see a huge rally when they have to buy those shares back. All we need to do is sit back and wait for the next set of drilling results. Be patient, honor your trailing stops, and we should make a nice gain from here.

Shares slid recently as Interoil's No. 1 critic, Barry Minkow, "revealed" a court case that he claimed revealed the company to be a con. Frankly, this is a red herring. First of all, the case is old. It's been kicking around the courts for more than three years. More important, Minkow publicized nothing the company hasn't revealed itself. The company has repeatedly disclosed this case in its SEC filings since 2007. The dispute surrounds how much a former trading partner was paid for a refinary it moved to Papau New Guinea. The erstwhile partner received $1 million in cash and $100 million in shares... and now it claims it is owed more. Regardless of the merits of the former partner's claim (and I see few), nothing in the case relates to how much oil and gas Interoil controls.

Only Minkow knows why he's raising a fuss over this nonissue. But I wonder about the timing. Minkow publicized this supposed revelation at the end of March. Hedge funds pay Minkow's tab, and they bill by quarterly performance. So this would certainly be a great time for IOC shares to slump.

Good investing,

Matt Badiali
April 6, 2010

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