As a retired Wall Streeter and SDRL shareholder, the trading over the past month was an orchestrated attack by shorts who were leveraging their December $45 PUT Contracts. I have seen this scam played out many times before.
Pure and simple it's market manipulation, which is illegal. Looks like they are setting up for round II next month.
Strongly advise you get the SEC involved in watching the trading.
Otherwise keep up the good work!
For years a trading cartel lead by SAC, Columbus Circle and other NYC/CT hedge funds jacked the drive stocks up and down, regularly shorting them down in the spring and summer months and running them up in the fall and winter. Despite rising profits, the stocks never went anywhere, but the traders and their firms made good money on the round trip. Between early this decade and 2008 STX's earnings doubled and they just traded the stock between $20 and $30 . INTC is another example during this same period.
I refer you to the comments of one Stephen J. Luczo, CEO of STX and an ex Bear Stearns investment banker on how traders with the help of dishonest Analysts manipulate stock prices to generate trading profits for their firms:
From 4/12/12 Forbes Interview of Stephen Luczo on Wall Street's pricing of the drive stocks:
"because the drive stocks are not being priced on fundamentals, they are being priced by large investment banks for volume, and volume requires volatility.
So that's why all the big firms are in a different camp than the smaller research firms on their perspective of the drive industry. Is it because these are the smart guys, and those aren't. That doesn't make any sense. It is because the banks are MOTIVATED by volatility and the boutique firms aren't. AND therefore the research reflects that. So you can create an environment that always creates doubt with billion dollar market cap swings in a week. It's insane. Why does it work? Because you have TRADERS who love to make that work."
Turns out after those comments, an SEC investigation, and the demise of the firm leading the short cartel the drive stocks went up 100%. They set new record highs today, up 70% this year
Good report, but FYI the short cartel would have bombed the stock even if you reported $100/share EPS. It's a trading scam run by some hedge fund traders and their friends at a few major investment banks.
As far as the report goes, this is from a just release Seeking Alpha Report:
he company reported fourth quarter EBITDA of $768 million, showing an increase of about 27% compared to the EBITDA for the same quarter last year. Net income for the quarter stood at $281 million, or $0.49 per share, a massive improvement on the net income of just $50 million reported at the end of the same quarter last year. Total revenue for the fourth quarter was $1.469 billion, compared to $1.280 billion reported at the end of the last quarter - the growth in revenues mainly came from West Tellus, West Auriga, West Vela, West Tucana and AOD entering service as well as a day rate increase on the West Gemini.
Let's not look at the future growth opportunity. The company has announced five jack-up contracts with Pemex - the contracts will start in the first half of 2014 and have the total potential of $1.8 billion. Furthermore, Total S.A. (TOT) has exercised the option to decrease the contract tenure for West Capella from 5 years to 3 years, which has resulted in the day rates to go up to $627,500 per day from $580,000 per day. Moreover, the company has continued its policy to drop down its assets to Seadrill Partners (SDLP) by selling part of semi-submersible rigs, West Leo and West Sirius.
Moving onto the debt and total assets situation of the company - the total debt for the company has come under scrutiny due to the elevated levels of debt. Total interest bearing debt went to $13.87 billion from $12.64 billion at the end of the last quarter, mainly due to the new $1.75 billion Sevan credit facility, re-financing of West Eminence.
The last two months there has been a large amount of put options purchased about four or five weeks before option expiration. For this month, there are currently 16,000 open January put contracts with strike prices between $38 to $41, versus just 6,000 open call contracts. This is very unusual since call contracts typically out number puts by two to one. Another unusual thing is that there has been little of the way of bad news for SDRL over the past 5 weeks or so and the market has run to new all time highs.
So why would anyone place such a bearish bet?
The way the PUT option holders scam the market is stringing together a number of 100 share sells, typically during slow trading times, lunchtime, to force the share price down. The large amount of leverage in short duration options can pay off big time in such a strategy. The same computers that generate these 100 share sells then work to close out these trades for the most part without lifting the share price.
Between 12/6/14 and 12/19/14, the day before the expiration of the December PUTS, SDRL fell for nine days during this period and then rebounded 2 points over the next five days after the options expired.
"Do you actually believe Sea Drill or any other stock should only go up/"
Stocks should go up because:
1. The firm expects significant earnings growth
2. The firm is raising its dividend
3. The firm has had good outlook as measured by backlog
4. The stock is under valued
5. The market is rising
6. There are exciting future opportunities for the firm (mexico off shore)
All of which are the case for SDRL.
You still have not provided an any real argument why investors should sell the shares.
Since I know the moron shorts are incapable of doing any analysis, let's take a quick look at the potential impact of interest rate rises on SDRL.
Let's look at the future. SDRL's EBITDA is a running at an annualized rate of $2.65 B this year and cash flow from operations is projected around $2 B this year. The company projects an EBITDA of $4.5 B in 2016, which extrapolates to a cash flow from operations of around $3.4 B, or an increase of $1.4 B from this year.
Now, total debt stands at $12.7 B.
Q: How much would rates have to rise to consume half of the $1.4 B increase in 2016 cash flow?
A: Average Rates on SDRL's $12.7 B in debt would have to rise by 790 bpts to consume half of the increase in expected 2016 cash flow and that assumes all of SDRL's debt is floating, I assume most of SDRL's debt is not.
DOES ANY SHORT MORON REALLY BELIEVES THAT WILL HAPPEN?
FYI, most rate increase forecasts over the next two years are in the 1% to 1.5% range from the current 2.85% 10 year yield.
Now, does that $4.5 B in 2016 EBITDA make sense?
1. The Company has a $19.5 B backlog which is expected to grow, this gives investors good visibility.
2. Demand remains high with three out of the 21 rigs still under construction, having already entered into long-term contracts with customers prior to completion. This year, Seadrill has taken delivery and financed a total of 13 rigs and expects to take delivery of seven in 2014, 11 in 2015, and three in 2016. By the end of this four-year expansion, Seadrill would have roughly doubled the size of its fleet.
3. Mexico is opening up its Gulf Coast to development. This is the largest unexplored region in the world, aside from the North Pole.
Think about it Einstein!
I'm not concerned about this stock eventually getting back to $50 a share; earnings day will be lucrative for all of us longs. Oil is just going to get bigger and bigger. Anyone that doubts that is fooling themselves. In the interim, the dividend stands at 9.5% as of today, not a bad entry point. Those of us who are dripping in on Friday, you got a nice raise with this temporary downswing. Looking at the chart, it might go down a little more, but don't sweat it. Let $GE, $BP, and $SDRL back down a little, and back up the truck. The S&P won't need to skyrocket next year like 2013 to make some serious cabbage. Good luck to all retail investors.
The most anti-business so called President ever. Divider in chief, Envy in chief, Dictator in chief.
Liar in chief!! Blamer in Chief. He has no Character, or any redeeming attributes!
A total complete failure; he needs to read the poem "IF" maybe he could master one of the qualities in the poem.
regarding the likely unsustainability of the dividend to understand the laughably superficial misinformed and bogus analysis these baseless charges are founded on.
To wit, the author's observation that a high and rising dividend yield relative to share price is most often (and he's right... only generally but not specifically in the case of SDRL) merely reflects a rational market's understanding of weakened fundamentals which would in all likelihood result in a dividend cut. The thing he failed to mention or perhaps was ignorant of was that in SDL's case, said yield is most reflective of steady dividend increases by a company confident of its own future and ability to not only pay said dividend, but to consistently (as recently as last quarter) increase it.
IOW, this speculated unsustainability notion is purely based on market generalities (more or less valid)... in no way proved or even attempted at by the author in making a case for the allegation specific to this stock.
Anyone that is doubting this stock is crazy... it is down over 30% since the beginning of the year in a year that is expected to be slow on growth for rigs... buying here you will NOT GET HURT. Wait it out and collect your 11% dividend. The stock will rebound from here and should close over 40 by years end. So lets do the math.... 11% on your money plus and extra potential to make another 10% by the end of the year??? 21%? return is pretty good if you ask me. and that is conservative. It may go a little lower but not much and certainly not 11% lower... COMMON SENSE PEOPLE, IM IN LONG AND STRONG AT 35.07....
Hello SDRL Shareholders. I am writing to you from March 2015. SDRL
Stock is currently 54 Dollars a Share. So relax and enjoy the Divy's for
the next year or so.
Sentiment: Strong Buy
Barrons blogged "Sdrl drilling for a dividend cut" Something needs to be done about those people, when freedom of speech is no longer or becomes simply malicious rumors?
Hey guys, checking in… up $42k this month trading SDRL, I get my stock alerts from flash market research (google them). Saw an analyst recommend them on CNBC and have been using them ever since, currently long right now in my portfolio.
I provided the date for the Forbes article where Luczo called out professional traders and Analysts for manipulating STX' share price. Go look it up on the Internet with the key words Luczo/ Forbes.
You might also pull up the price chart for STX after Luczo made his comments and the SEC began its investigation.
Only problem is their rigs are contracted out for years at a set rate, they have over 20 billion dollars in business backlog, and the new units coming online are also contracted out. Most modern fleet in the industry. Only thing that is scary is your lack of experience in being a short. Most smart investors here laugh at your feeble attempt to post negative news. P.S. Negative news from Noble Drilling, the weakest of the drillers with a fleet averaging over 25 years is responsible for the minor sell off, in addition to the entire market showing signs of a long needed correction. THIS IS A BUYING OPPORTUNITY. Go back to stocks 101 and reeducate yourself.
I've been in and out of sdrl several times at higher price range. Love the Dividend and always have made money on the sells. At this price 37.00 and change, its a great buy, if it goes down a few dollars more i'll add to my over 2,000 position. The caution figures in to this!!!! I bought into the oil drilling rigs in the late 70's and lost my life savings at that point and time. Rigs were floating in harbors and ports because of an over supply and diminishing contracts and much lower day rates....global marine (bought out years ago) went from the thrity dollar range to around $2.00 dollars and another driller i had geo drilling, went belly up. 60k invested went down to a couple thousand dollars. Can it happen again, Yes, having said that, dollar for dollar and what i see now, if you miss the next couple years you'll miss the opportunity of a life time with drillers sdrl, and buy NADL the new stock issue when it comes out soon......This is my opinion only, and someone who has come back from an all in from early 2008 and a 65% loss in my second life's savings to a substantial profit as of this past year. Timing is everything......I learned the hard way.....Good Luck......
Circumstantial evidence would seem to suggest this. Paid dumpers, ordinary shorts and those who profit from attacking SDRL have flooded the web and here. A number of Seeking Alpha articles and others containing inconsistencies, errors, and innuendo are issued. And it's persistent. Can it be that this stock is the target of a shake n short operation ? Clearly, their weapon is the question of how diminished or rate pressured offshore drilling becomes over the next 2 years. The speculated length and depth of these pressures present a perfect storm shorting opportunity, perfect for inducing fear. Scare away enough retail investors. Shake the weak hands out. Looks like that's what longs are facing here. This must be a very high stakes game, if the volume of negative efforts is any measure. Regular investors depend on reliable information and intelligent analysis. This shake and short operation adds a layer of obfuscation. But will their fog induce investors to go elsewhere for a 10.6% dividend ? Are there enough weak hands left to sink this sea puppy ? Evidence suggests otherwise. The shorties are stepping up their efforts, yet retail investors are buying in strong numbers. These are both good signs. Of course, some good news or an absence of bad this quarter will ease SDRL up nicely. Facts and conditions are what really matter. All we can do is sift and weigh. GLTA
Sentiment: Strong Buy
"INTC is another example during this same period"
Prior to the PC slump, I watched INTC's earnings grow while the shares go no where. These hedge funds and investment banks are using computer programs to jack it up one month and down the next. It's a money machine for them and a rip off for the shareholders.