Why YPF is among safest stocks (energy or otherwise)
My 1st priority is not to lose.
*I called LYG / Lloyds Banking group early this year. I had 60% portfolio invested in it. (bought 1.92). Look at my posts, it's the only one I made a case for like this. This is my pick now that LYG has risen to the British gov first started buying shares.
- Like Lloyds Banking Group - YPF being partly gov owned, it's like having a QE system built right into it.
- YPF is nationalized. Where this is a minus for some, it's a free-pass on any big environmental disasters to me. It won't be ruined by mass lawsuits like BP (and hurt Halliburton).
- Argentina has one of largest shale Natural Gas reserves, comparable to fields in NE United States.
- The U.S. is highly interested in Gas. The more available globally,the less of an arm-lock Saudis, Iran, etc have on prices. In fact, right now, in many ways the U.S. has unprecedented leverage on the Saudis with how we decide to develop our own oil and whether we export it internationally (it'll happen sooner or later). This cannot be overstated.
- Carlos Slim [world's richest man] owns 8.4% of the company. He brings influence and resources to defend his investment and ensure it doesn't lose. He bought over summer, around this price.
- Maybe nicest of all, if we go off a cliff, none of these factors change. I don't see this co having much downward pressure at all.
- I called the energy 'researcher' who wrote U.S. co's should avoid YPF because of Argentina's history of non-payment [YPF says Repsol mismanaged things and leading them to actually import oil]. He said sooner or later a big co would 'stick a toe in the water'.
- The Argentina President was in Houston last week to drum up business, doing a doh/pony show for the oil majors.
- YPF increased state controlled gas prices 7% Aug & 3% Oct.
- Mass liquidity/QE leaks into emerging markets. Energy and Argentina/Brazil are favorites.
- YPF basically holds hard assets. The co. isn't going anywhere, and it's 2 assets oil/Nat.Gas are always under (increasing) pressure.
- China is also extremely keen on developing Natural Gas to lower energy (and indirectly, through leverage) oil costs.
I think 'unofficially' the U.S. helps direct and support companies that can develop gas (Chesapeake?). It strengthens our economic and national security. It's our and the world's Achilles heel. It also funds our most adversarial enemies. [Iran would be poor country if not for price of oil].
Expect it will go up 30% at some point this yr, an think it may double in a year.
Disclaimer: I own an immodest amount of YPF (90%+ of my savings)
I stated before that YPF was a mugging victim when in fact Repsol was the unfortunate loser.
I like YPF (even though revs & earns have been somewhat flat the past 7 years.)
Definitely wouldn't bet the farm though (don't let analyst price targets dazzle you...)
I bet the farm - but have't read 1 analyst report (no faith in them).
Btw, I do not want to invest in a co I know does things unethically, and from what I can tell (and even after speaking to an Energy 'researcher' who generally doesn't trust Argentina) it's a tough to call. They made the case oil imports should have never climbed so dramatically if Repsol were meeting their contract demands. But - I'm not intimate with the contract, nor Repsol's ethical actions.
I do like the social aspect of a country using revenues to help support their people, similar to PBR - Petrobras.