We are up from $40 to $52 in a year and getting a 5% dividend.
Anybody want to talk about opportunity costs?
Oh, I could have bought Tesla. Tesla stock is selling at 14 times sales and 32 times book value. It could fall 90% and still be overvalued compared to BP. I'll take BP, and sleep very well at night as a bonus.
Here made statements with stock predictions over the past year. You were adamant. Emphatic. Dogmatic. You were right and everybody else was just wrong or ignorant. Now, called to task, you plead ignorance. " I am not a CFA, I don't make stock predictions." Do you want me to copy and paste those messages to refresh your memory? Here are the statements you made copied from this board. Look them up. They have your name on them. My comments follow using the .
Just to clarify for my readers, my projections for BP's stock price decline extend only to Q4 2014. There will come a point when BP will become a "buy" … you can bet I will keep track and let you know when I think that happens.
The seemingly secure dividend provides a floor to the stock. That will change when liabilities hit earnings, which should be sometime Q2-Q3 2014. But that could happen sooner. The better move is to keep money on the sidelines and go in BP after the real tsunami hits next year, imo.
Part 2 (Continued)
I do think this will end up in the 30s by year end, so being short is the best call.
Let's face it, the math is simple. Even if you think this oil spill is overblown, it doesn't matter, THE LOST OPPORTUNITY COSTS ARE KILLING YOUR PORTFOLIO, AND RUINING YOUR FUTURE!!
Think about that and make the right decision. You'll be glad you did, and you can thank me later.
Wait until the liabilities pile up in the next 6 months and you will see more uncertainty and the stock price will drop again. I'm sure of it. (September 27, 2013).
Here are facts/stats Vikki. BP is not so dumb as to argue fiction in a court since courts require a high level of documented proof of facts:
Additionally, BP's request for the Supreme Court to step in and offer guidance comes in light of the company stating that of $2 billion paid already, "those awards include $76 million to entities whose entire losses clearly had nothing to do with the spill." BP cited "lawyers who lost their licenses and warehouses that burned down before the spill occurred" as examples.
BP claims that the "illegitimate awards also included an additional $546 million" to individuals located "far from the coast" and who "are engaged in business activities that bear no logical connection to the spill."
Irony? Yes I see irony.
Let's call John Doe a victim. He asks for and deserves 100K. I support that he get exactly that. You probably agree.
Now let's call Jane Doe a frivolous $100K claimant. She deserves 0.
Let's call Sally Poor a BP shareholder since her teacher's pension dividend check is largely dependent on BP. She worked all her life and deserves her pension.
As the funds come from the same source, a public company owned by the public, this is not a zero sum game. Jane Doe and Sally Poor - what happens to one directly effects the other. So you choose. Let's make you God for a day.
As for me, I don't care about the outcome other than wanting fairness to rule. If John Doe gets 100K, and he deserves it, it costs me .0001 cents. It has no impact. All the claims together have almost no impact. If Jane Doe gets 100K, Sally suffers the loss undeservedly and John has to jump through more hoops so he suffers indirectly. When frivolous claims appear, deserving victims suffer. Just get rid of the frivolous claims and everyone wins.
On share price, balance sheet, view of assets and liabilities, I don't need to admit anything. I am an MBA and CFA, and I worked on Wall Street on the institutional side.
I am telling you that your opinion of pending liabilities and any damage those pending liabilities might have on BP's share price and/or dividend is just wrong. And already, my argument has proven out while yours has evaporated, and that is why you gave it up.
What I care about as a shareholder is share price. I don't care about weather John Doe gets his $100K for lost fishing claim with or without merit in the courts. That trivia has virtually no impact on me. It is unfortunate when pigeons get handouts, because you teach pigeons how to beg rather than hunt for their food as nature intended. But that is a sad unintended consequence of this settlement agreement.
I care a lot more about BP's Russian situation and its current pipeline. Macondo, whether it settles for $20B or $50B in DCF terms makes virtually no difference long term. BP is generating almost $30B per year of free cash flow.
Only you care about this trivia, and only you have so little life, you have the ability to direct all of your emotion and energy on a 4+year old event that happened to somebody else. That's your life. I care about the economics and the horrible unintended consequences of creating a class of corporate welfare ambulance chasers. Those are the significant things in play here. Your own personal vendetta ("if BP pays, that will make up for all my life's misery") - what is that about?
Hopefully you will take a walk today instead of dwelling on your obsession.
Btw, did you notice my $52+ post got 8 recs? That ought to tell you that nobody shares your concerns. We are on our vacations, celebrating basking in the success we have. Now you want to turn your unhappiness into a shared event by saying tomorrow you may die. That ain't gonna happen.
Your pathos is misplaced. Clearly you don't have any friends or family on which to focus your energies, so you have adopted this cause and these "victims" as your family. Very sad. Tragic. What a waste of a life. I am sorry for you.
As for BP, BP has single handedly funded the GOM economy over the past 4 years, and taken responsibility alone even though multiple companies were involved.
In the end, whether it is maximum liability or less, BP has moved on and now has bigger fish to fry. It is a company with massive worldwide assets and revenues. It is no different than GM and its recall. Just a small piece of a company, except that BP is a very rich and well functioning money machine, unlike GM. I am sorry if this is hard for you to accept and understand.
Please do update us on the opportunity cost. We are a finance board here. This is not a consumer or environmental complaint forum. If that is your agenda, there are other venues that deal with such topics.
You previously stated emphatically that morality was not an issue. All that mattered was decorum, that is what was agreed, not weather morality had ay impact.
Now you want to argue morality.
You also argued opportunity cost, and stated many times emphatically that BP's dividend and/or buyback/share price would suffer as a result of liabilities.
Now you argue that you are not good at finance and have no predictive capability on stock value.
All I see is a consistent flip flop. Which one is it? Why are you a so blatantly hypocritical of your own statements.
BP continues to do the right thing as non spill-related claims have spoiled was was a good settlement agreement. Nobody thinks that when a father says "I'll pay for all damages caused to the neighborhood by my son within a certain radius and timeframe," that suddenly every thing that happened to every house including Grandma falling down and breaking her hip is now a claim.
It is unfortunate that deserving victims claims are now being held up by due process, not because of BP's actions, but because of the fraudulent nature of undeserving claimants. If BP as a company is being honest, fair, and responsible, then why do some, in fact many and their attorneys, disrespect that fairness and generosity by immediately abusing the system?
This would be equivalent of social security agreeing to pay disability benefits for anyone adversely affected physically by the spill. Later entire towns line up in between surfing and running marathons to claim their disability benefits.
BP is still doing the right thing. And even more so. BP needs to fight to protect Jane Does pension so that Cindy Scammer can't take it away as some absurdly unrelated settlement claim. BP is fighting for its owners, that's us and a lot of deserving retirees. We worked for our benefit. Some claimants want to steal that benefit for no other reason, than they can. That's still robbery!
This is naive. BP is a public company owned by the public. So let's see if I understand. You want Jane Work Hard retiree to pay with her BP retirement income for Sally Scammers fictitious claim when Sally has never worked in her life and scams Welfare and every other institution to your and everyone else demise.
So you choose Sally Scammer, a thief with no connection to the spill other than robbery over Jane Work Hard?
Is that what you are saying? Because I am saying that is the choice the courts will have to make. If you don't get that, then nobody can help you because you don't understand public company ownership.
You are right, so right. The worst thing you can bring to investing is emotion and personal bias. That clouds your judgement. As you point out, GM is the poster child of bad corporate behavior, yet Vikki chooses to ignore the major corporate abusers to focus on a single major incident 5 years ago and a few relatively minor incidents with BP before and after.
As for spill litigation, even Vikki does not dispute that BP is more victim and culprit.
Congrats on your solid day last week, and your great returns via BP. If I had held more BP, my losses last week would have been less.
Over time, BP will prove to be a gem. What other company produces tens of billions in profit in a down year? As the dust settles, the Vikki's will start complaining that it is not fair that BP is earning so much money. When oil prices spike and BP earns $100B+ and the stock doubles, Vikki will be crying conspiracy and asking everyone to stop driving their cars. She will have long forgotten that she had an equal opportunity to invest in BP as we do now. The only conspiracy she faces is her own self destructive tendencies. Too bad.
AIG's acquisition of AerCap has a $2B bonus attached, which when realized, will increase book value the same $2B for a massive upside.
Here's the math:
AER at acquisition: Stock price $24.93 X 97.6M shares = $2.43B. That's the deal we got at announcement.
AER as of today: Stock price $45.44 X 97.6M shares = $4.43B. That's the deal we have today.
Nobody cares about 5 year old history. OK you do. And a bunch of ambulance chasing claimants and their attorneys. It is over. $51.02! That's what we care about. That's what is relevant today. $51.02. You already said that morality did not matter (when discussing the claims process), so please spare us some bipolar reversal on this. $51.02. Plug that number into your opportunity costs and update us on the results.
Thanks. $51.02 out.
Vikki: I see your points. I am selling BP to buy GM and Phillip Morris. Who needs oil when you can have cigarettes and faulty cars?
Oh, and since when do you have no opinion on the stock price? Since you were proven so absolutely 100% wrong with your opportunity cost nonsense? At least you are learning from past mistakes. And it appears that you now have another anti BP argument other than a 5 year old mostly already played out one. We can both agree that Russia is an issue. Macondo? Are you still kidding me?
Morality? You already said many times that morality had no place when you lobbied for frivolous claimants being paid. Now you want to hit the reset button, and go for morality when the tables are turned.
Vikki....this is not making you look good....
To add an example, this is like the School in which you live gets sued. You are all in favor. "Punish that School. They did a bad thing. Don't let any claim legit or not go unpaid." You cry out that every welfare recipient or thief deserves a share.
Then you get your property tax bill. Your taxes went from $4,000 to $8,000. You look at the detail. There is a new line item which reads, "School Legal Settlement."
Now its you "The Public" that will pay for somebody's thievery. Now your money got stolen. Its the same deal.
And while were at advocating thievery and you are all for it, please send your bank account information so I can give it to the unfortunate BP Spill claimants who might be denied claims.
No more than BP would drop if oil dropped $2 on the world market, or Russia did something with Rosneft, and probably much less. So most investors, not being emotional, and not being tied to a single event that happened 5 years ago, don't give the question much emphasis, because it is now trivia.
Obviously, you do for your own reasons. That's you. That's not investing. That's not what we care about. That's why we have made 25%+ returns in the past year while you have pined over your emotional state.
You have a different agenda. It is not investing. We are investing and making money and happy. You are not investing, not making money and not happy. How can we have a discussion? This is an investment forum. Perhaps your psychologist is a good candidate for your emotional state. Why bring that here?
I am pleased to see our stock at almost $52 per share, soaring and paying a nice dividend.
You won't like the answer coming from me but here is the honest answer.
Financial accounting standards tell accountants to mark to market goodwill and intangibles on a regular basis (generally once per year). This works only in one direction, called impairment. If the asset values increase, nothing is done. The standard test is a self-evaluation to see if there is justification for impairment. To answer your question, there is no legal obligation. That said, investors recourse for inaccuracy in any financial report or statement by the company is a shareholder lawsuit.
Interesting to see what I wrote on this subject earlier. My prior posting is copied below.
My point was to say that the book value was overinflated by intangible assets. Almost all the equity is in intangible assets. This is NOT what a value investor wants to see AT ALL!
Especially when (and this was my specific argument) most of that intangible value reflects the Heald acquisition which I argue was a complete waste of $395M. The other poster said that asset had not been impaired so it still must be worth the acquisition price.
My response shows that the loss in market value which reflects lost earnings power and asset values clearly shows that there is little value in Heald and in COCO.
If you can demonstrate that Heald is still worth $395M, which is more than COCO is worth as a whole, then yes, the case for undervalued assets and market cap can be made as you suggest. Can you demonstrate the value. At 11 X highly suspect forward earnings and 3.X tangible book value, based on the current 4.xx PPS, a value investor like me sees an overvalued situation.