Little Bear is a Big Bull on Venezuela
Zachary Prensky, Managing Director of Little Bear Research, has been a big believer in Venezuela, despite a political climate that has scared most investors away.
Specifically, Prensky has been buying up shares in Harvest Natural Resources (NYSE: HNR), Little Bear's biggest holding, since he heard the company was going to sell its Venezuelan assets. That investment involved putting in a lot of man hours on the ground, investigating every aspect of the deal. This type of deal is "not for someone who puts in only a little time", said Prensky.
Little Bear's investment approach is to focus on binary events to find foreign-based energy companies which trade on US exchanges. Presnky says some of these companies have assets worth much more than their share price.
On Thursday, Harvest announced that its wholly-owned subsidiary, HNR Energia B.V., signed a definitive Share Purchase Agreement with PT Pertamina, the national oil company of Indonesia, to sell all of the company's interests in Venezuela for $725 million in an all-cash transaction.
Despite the 100% move in Harvest's share price on Thursday, Little Bear sold only 10% of its holding. Prensky feels the share price could move as high as $13 to $15 prior to the closing of the deal.
Prensky said the Harvest deal is enormous and "will change the way people will look at Venezuela going forward".