Italy---excellent food, good wine, and hopes for a PO Valley score. If it's dry hole, ah well, arrividerchi. Good question... But I like the willingness to be relatively unhedged as hedging is really just an insurance contract (unless you can divine the price directions) and as such just adds a percent or two to expenses over the long haul. VPI looks good to me at this level, yes the poison pill puts a cap on buyout interest but the underlying assets net of the huge writedowns are looking good.
"...hedging is really just an insurance contract (unless you can divine the price directions) and as such just adds a percent or two to expenses over the long haul."
You're wrong. Hedging locks-in a guaranteed return, ensures dependable profitablity and payment of the core costs. As such, hedging is more appropriately described as setting and accepting what the seller feels is a fair rate of return. Unlike insurance, hedging is not meant to pay off in case of failure, it is meant to pay off in all scenarios. Those who hedge properly leave portions of their product (depending on mkt cap & banking req's) to open-market sales. If they hedge before the market goes south, people see them a geniuses and ask why they didn't hedge more? If the market goes north, the opposite takes place. Either way, the savvy hedger takes home a profit and their company continues to grow in good times and bad -- that is called sound management.
Anyone who manages a publicly traded company in a manner pleasing to day traders should be fired. That sort of instability may appeal to those who see the market as a huge gaming casino and like to 'play' it; but it is wholly injurious to a real company with real employees and real products and services to sell which clients must be able to depend on being there in the weeks, months and years ahead.
Hedging is an insurance contract. My statement was correct. If you take the universe of all hedges the marketers make a percent or two. If you are a smart hedger you win and a poor hedger you lose but it's like the house in Las Vegas... the house always wins. You must understand the logic since after writing "your're wrong", you refer to the "savvy hedger" which makes my point since if more than half the hedges were "savvy" the marketers of those hedges would be out of business. Some companies must incur the cost of hedging for as you say, "payment of core costs" occasionally at the request of the banks. Somehow you seem to imply I am a day trader because I pointed out that hedging ultimately adds to the costs assuming you are an average hedger. Actually, I'm a long term holder of VPI except for a brief period( during the Argentina/ Genesis eruption) when it fell from ~$15 to 10.