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BP p.l.c. Message Board

  • geac_computer geac_computer May 14, 2009 5:57 AM Flag

    BP undervalue vs peers...XOM=$69?? BP $46??

    BP BP PLC 46.04

    CVX CHEVRON CORP 68.10
    XOM EXXON MOBIL CP 69.77
    COP CONOCOPHILLIPS 44.60
    RDS-A RYL DTCH 49.07
    PTR PETROCHINA CO ADS May 13 104.83

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    • It i sno longer about value and oil leases, it is about how many billions of dollars it will take to repair and clean up their mess, and pay off the damages. Exxon Valdez looks like a day in the park compared to this disaster !

    • You've been long and wrong for quite a while.

    • Hi Peg_Leg,

      Interesting, thanks. You must be in the Big Sky Country. I've never been there but as I recall I read about the Montana factoid of not having a speed limit, I guess in the late '90s, in a book either by a Native American searching for the soul of America or by a burned-out ex-politician re-creating the journey of Lewis and Clark before the bicentennial started in 2003.

      I think I've only gone over 85 MPH a few times (in my youth), to 'clean out the carbon in the engine' and once when I was in a hurry - which was interupterd by a flashing red light. :-(

    • Hi Ferglit,

      This is getting interesting - or maybe not. :-) I'll make this my final post and everyone else can have the last word(s).

      "Suppose I suggest that, since both Emerald Energy and BP are both currently at £5, then the stocks are equivalent. Would you agree?"

      ABSOLUTELY! I could take a share of Emerald right now, even though I really know ABSOLUTELY NOTHING about Emerald, to my broker and cash it in for 5 pounds - EXACTLY the same as I could do with a share of BP! I think the fancy word "fungible" applies here somehow.

      "Would you trade in your BP for Emerald? "

      AGAIN, ABSOLUTELY. SURE, WHY NOT? See above.

      "If you wouldn't - then I think you have tacitly accepted that a single raw share price is not useful information. It needs something to be compared against."

      Since I would, as above, I reject your contention that "a single raw share price is not useful informatiom."

      THAT SAID, PLEASE, EVERYONE WHO BELIEVES "RAW SHARE PRICES" ARE "MEANINGLESS", "POINTLESS", "NOT USEFUL INFORMATION" (i.e., 'not worth the paper they're printed on'), OUT OF THE PURE GOODNESS OF MY HEART, I WILL TRADE, '1 FOR 1', RIGHT HERE AND NOW, A SHARE OF BP FOR YOUR SHARE OF BRK-A, PTR, XOM, CVX,... WITH ABSOLUTELY NO KNOWLEDGE OF TODAY's SHARE PRICES OR OTHER EXTERNAL, CONTEXTUAL INFORMATION (time-series, P/E, dividend,...). I AM IN COMPLETE ISOLATION.

      Should insufficient shares (< 100) of either BRK-A, PTR, XOM, CVX,... be tendered today, I will daily and graciously extend my offer to July 1, 2009 and will again not refer to any "raw share prices" or other external, contextual information (time-series, P/E, dividend,...) during that period.- i.e., again, I will be in complete isolation.

      Please tender your share(s) IMMEDIATELY to my broker and transfer agent: Dewey, Cheatham, & Howe.


      **************************************


      "And re the speedo - suppose the man was lying, or the car was on test-bed rollers, or being towed, or on a race-track... no context"

      Those are 'SPECIAL CASES', not the GENERAL CASE. There have to be SOME, BASIC, NORMAL 'ground rules' and assumptions, accepted by all, like 'examocobp', not Bernie Madoff, is really driving on a normal (Sunday, vacation, commuting) trip, 'examocobp' is not in reverse gear and/or is erroneously reading the KPH, not MPH, scale and/or driving in the Alps going up/down a 15-degree slope,... If not, and you wanted to include special cases, this thread would REALLY descend into the maelstrom. :-)

    • What U.S. state undertook a brief, unplanned experiment with highways with no speed limits—similar to the German autobahns—in the 1990s?

      Montana is the state in question. Imposing no posted daytime speed limit from Dec. 8, 1995, to May 28, 1999, it instead enforced "reasonable and prudent" driving speeds for the bulk of that period. Montana police typically defined "reasonable and prudent" as around 80 mph, so one could argue that this vague guideline was nonetheless more stringent than the freedom afforded by Germany's no-limit autobahn speeds.

      However, for the last five months on the Montana "experiment," the reasonable and prudent standard was not in effect. The Montana Supreme Court ruled that the statute was too vague.

      So, for five months, Montana effectively had no enforced daytime highway speed limit. (A 65 mph nighttime speed limit was always in effect.) In May 1999, Montana enacted a 75 mph daytime speed limit on its highways.

      The impetus behind this period was equal parts political and incidental. From 1974 to 1995, Montana—as well as every state in the union—had a federally mandated maximum highway speed limit of 55 mph.

      This federal law was originally a temporary measure during the energy crisis of the mid-1970s. However, an immediate decline in highway traffic fatalities convinced Congress to make the 55 mph law permanent in 1974.

      By 1995, transportation experts realized that a number of factors beyond mere speed limits had helped lower highway traffic fatalities. The federal government repealed the 55 mph mandate in 1995.

      Rather than enacting a state-level highway speed limit as every other state did, Montana reverted to its 1973 reasonable and prudent standard. The State Supreme Court forced the Montana legislature to act when it struck down "reasonable and prudent," resulting in the more common 75 mph posted limit you'll see today.

      Ironically, just as the 55 mph speed limit arguably "lowered" fatality rates in the 1970s, evidence now suggests that the no-speed-limit era in Montana also lowered the number of fatal accidents on the state's highways, striking a passionate debate between safety experts and driving enthusiasts. Such is the stuff of great debates—and great Geek Trivia.

    • LOL! I'm sorry,,, I just can't help but ask:

      My wife is Italian.
      My neighbors wife is Chinese.

      Which one makes the best burritos?

    • Hi hasten,

      Just to chip back in, I think you're making my point. You and I, and most of us here, do indeed check the stock price daily. Because we do so, we don't see today's price in isolation, but (in this case) in a time series, a historical context. We were asked to consider the thesis that XOM was at a higher absolute price than BP, therefore BP was under-valued. There was no context on how that ratio had changed, or why, or how other data such as p/e or yield compared, or had changed.

      Suppose I suggest that, since both Emerald Energy and BP are both currently at £5, then the stocks are equivalent. Would you agree? Would you trade in your BP for Emerald? If you wouldn't - then I think you have tacitly accepted that a single raw price is not useful information. It needs something to be compared against.

      (And re the speedo - suppose the man was lying, or the car was on test-bed rollers, or being towed, or on a race-track... no context).

    • This thread started with ...

      <<<BP BP PLC 46.04

      CVX CHEVRON CORP 68.10
      XOM EXXON MOBIL CP 69.77
      COP CONOCOPHILLIPS 44.60
      RDS-A RYL DTCH 49.07
      PTR PETROCHINA CO ADS May 13 104.83>>>

      The contention was made that the above information is meaningless.

      If this is the only information that one has, it is meaningless for comparison purposes. What does the above inforation tell you if that is all you have?

      Do we check the share price daily? I do. And raw share price has great value when put in some sort of context.

      I think the disconnect here is that comparing companies share price, at any point in time with no other information to put it in context is useless.

      Trending raw share price has value. Comparing raw share price over time to competitors has value.

    • Hi examocobp,

      Basically what I'm contending is that if anyone says the raw share price is “worthless” and “pointless”, they’re in effect saying that the raw share price is nothing more than a RANDOM NUMBER. Which means raw share prices shouldn’t be used in any way.

      “Stock prices on their own don't tell you much of anything”
      Well, at least you don’t say they’re “worthless” and “pointless.” And I do find it interesting that I, you, and probably everyone else here check these worthless and pointless (random) raw stock prices yearly, monthly, weekly, daily, hourly,… And we even do calculations with these worthless and pointless (random) numbers, like “stock price relative to earnings and EBITDA, stock price relative to dividend, and/or total numbers of shares outstanding along with debt, to determine enterprise value of the firm, …” Imagine that! :-)

      “if someone tells you a car is driving 50 mph, it tells you nothing …”
      On the contrary. As I contend, raw stock prices and MPH contain (universal) intrinsic, inherent, useful information. For example, if you were in your car, and I am here, and you told me you’re speedometer was at:
      MPH & MY INFORMATION
      0 probably stopped
      5 “ in heavy traffic
      20 “ in a school zone
      30 “ on a city street
      35 “ in a work zone
      45 – 75 “ on a main artery
      75+ “ speeding
      120 + “ something very wrong
      1 – 120 “ running

      “there is no context for the [MPH]”
      Of course there is. All you have to do is look out a window and/or at your instrument cluster. And it is this ‘external’ contextual information, that coupled with MPH information that gives you even more useful information. Well, 0 MPH and smoke coming out of the hood means you’re not stopped at traffic light; 75+ MPH and no flashing red light means you’re not going to get a ticket (and maybe you’re even driving in Montana); 75+ MPH means better check the fuel gauge because you might need a gas station soon;…. Your MPH indirectly relates to my P/E example: where the raw share price P contains useful information and dividing by/calculating with/incorporating other useful contextual E information, we can get even more useful information, a figure of merit, P/E, if you will, And for your MPH example, more useful information about your car.

      Finally, if P is considered worthless and pointless - in effect, a random number, why bother with The Stock Market? May as well play the slots in Vegas and at least save on the commissions!


      (“if GM did a reverse 100 for 1 split, and became a $100 stock instead of a $1 stock, would that all of a sudden make the company much more valuable?”

      No, a reverse split is generally a BAD indicator; a too low share price meant company problems and the possibility of being dropped from an exchange

      “If XOM did a 10 for 1 split and became a $7 stock instead of a $70 stock, would that make XOM much less valuable?

      No, a split is generally a GOOD indicator; a too high share price meant a company doing very well but the possibility of buyers being ‘put off.’ by the high price.- there are many buyers who could afford buying a ton of BP at $50, but wouldn’t or couldn’t buy 1 BRK-A at $93,000.
      )

    • I'm not sure what is confusing. Stock prices on their own don't tell you much of anything (just like if someone tells you a car is driving 50 mph, it tells you nothing about whether the car is going too fast, too slow, or an appropriate speed, because there is no context for the number). On the other hand, stock prices along with other context, such as trends in price, stock price relative to earnings and EBITDA, stock price relative to dividend, and/or total numbers of shares outstanding along with debt, to determine enterpries value of the firm, can tell you a whole lot.
      Just consider, if GM did a reverse 100 for 1 split, and became a $100 stock instead of a $1 stock, would that all of a sudden make the company much more valuable? If XOM did a 10 for 1 split and became a $7 stock instead of a $70 stock, would that make XOM much less valuable?

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29.02+1.38(+4.99%)Feb 12 4:00 PMEST