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Berkshire Hathaway Inc. Message Board

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  • neb2000us neb2000us Jan 2, 2004 12:31 PM Flag

    Buffett and PetroChina

    '"Our annual reports contain not just financial but also operating data," he says. "We report production data every quarter and reserves as well, because they are an oil company's most important asset."'

    PTR's reporting is as good as anyone else's in the business, inclduing Exxon and Royal Dutch. Very impressive and they clearly did their home work before putting these reports together. The only drawback, if there is one, is that it is more difficult to get a handle on the quality of non-reserve fixed assets, such as P & E, but they are also apending vast sums on new projects & upgrades.

    After reading the reports, I was personally surprised that so many analysts were negative on the company, but I probably shouldn't have been, because their views were almost entirely based on top-down and projections of oil and gas prices and, of course, extremely myopic. The consensus earnings forecast for 2004 is still down. Their views in no way, that I could see, were based on reserves and production per share. The only oil analyst to even begin to trust, IMHO, is Charles Maxwell anyway, who takes a very long-term view, and is very bullish.

    ML even put a sell on the shares at $27 or so, based in large part on oil price forecasts, and in part on the theory that when the Chinese market is opened up to competition that PTR would not be able to compete with the supposedly more efficient Exxons and Royal Dutches of the world. However, even if true, China doesn't appear to be type of nation that will allow sudden and intense competition.

    One has to keep in mind what we are seeing here is the price in US dollars per share, based on the current fixed exchange rate between the dollar and Chinese currency, which may or may not be reflective of reality.

    The Chinese markets will continue to be volatile for quite some time, and influenced by Chinese investors who are mostly gamblers, but this shouldn't cloud one's opinion of the value of a company.

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    • The Chinese markets will continue to be volatile for quite some time, and influenced by Chinese investors who are mostly gamblers, but this shouldn't cloud one's opinion of the value of a company. Mr. Neb.

      If one subscribes to this "conventional wisdom" an interesting play has been and continues to be WYNN, as Mr. Wynn will bring LAS VEGAS to Macau and BIG LAS VEGAS to Las Vegas.

      Best Regards
      MG

    • Yea i have been very happy with the way warren is spending my part of the Berkshire fortune.

      May we all be coming so rich that personally investment of 100M is to small to even waste time thinking about it.

      SWUSC

    • Neb, when you said this has the potential to be a homerun, I guess you weren't kidding. I took some half off the table on Wed and will probably live to regret it. I did it simply because I don't want to see nearly 10% of my portfolio in PTR.

 
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