Remember one thing Gartman's analysis comes to us FREE via CNBC. Real analysis is built with data that is rigorous to compile and would never be brought to the masses by some guy peacocking on CNBC. Not long or short oil, but just tired of this guy with his 25 annual long tail predictions that continue to make the headlines.
Great post. When Buffett exited XOM it said something about how he views the industry from a valuation perspective. When the barrel was $90 he calculated that the company after lifting cost could pay the bills, replace the barrel, and then have a reasonable amount left over for owner earnings. After the barrel crashed to $50 it not only wiped out owner earnings but also the cash flow needed to replace the barrel, and in some cases the cash flow to pay the bills i.e. interest on debt. Since Buffett isn't in the business of timing markets he calculates this into perpetuity. So until the barrel either gets back up or cost can match the drop the intrinsic values of these E&P's are upside down. For that I don't think that there's such a thing as getting great value even though a lot of these are 50% below 52 week highs. You can make money, but lets' be honest because if you do so you're speculating on timing.
I wonder if this approach of leaking to the media that you want to be sold deep in a down cycle doesn't generate a few chuckles from the few in a position to acquire it. The stock might take a hit next week because it looks desperate.
The problem with mid-twenty percent growth is the comps that follow. The last big miss they had resulted in the stock falling below $100. That miss was then followed by a blow out the very next Q and turned the $100 shares into an excellent investment. The recent history of bounce backs is kind of a built in premium until proven otherwise. bbdott believes that the next Q will be a bounce. I have my doubts. Comps are a high hurdle, and competition is always tight. A new IPA, I doubt will move the needle.
Given the valuation of Craft makers you would think the Grossman family would want to cash in. Have not heard a peep of an IPO.
Interesting idea but I didn't see it from the top 10 holdings as being weighted towards energy. Also while its packaged and convenient for us joe six packs to buy from they do take a nice slice from the top. if Fed policy finally shifts you can say goodbye to 7% yielding junk bond era which could be a real drag on total return.
Better yet can you find me the next Rich Kinder? Find me a guy who can build a $90 billion beast from a $40 mil base. I would like to get in early so my initial investment pays back 10 fold in annual dividends. And the 100 fold capital gain would be nice also...Find me THAT GUY!
Thinking along those lines maybe we see a Canadian tar sand producer to make a horizontal buy of a sizeable Marcellus/Utica producer? The house passed the Keystone pipeline. It seems that might be why COG is catching a bid. Either way more Marcellus will eventually be shipping north.
Exxon is sitting like a king in front of a harem right now. If they have one problem it's that they have a lot to choose from. A triple A rating gives it around a 2.5% cost to borrow billions long term. They have billions of international cash, and billions in treasury stock. With these tools you have to think that they do some big M&A in this enviornment.
It's not nearly as dramatic as you want it to be. He will simply convert another 100k or so of B's into A's. Of the newly converted batch he will transfer some A's into his families trust funds, and then sell most of it into the open market for some cash. He has 3.8mil B's that are always freely convertible into A's. If he felt that this was wildly over priced he would be converting and selling at a rate of 1 mil per year, and bypass transfering to trust funds. Theoretically he could convert and sell all the way down to 100 B shares and still have control of the company. But he doesn't...I wonder why?
Thanks to the well timed Rampart JV they actually escaped this on the plus side. Cash in was ($2.7mil) cash out was $3.4mil. They retained much of working interest over most of the acreage with some seismic data over some portion, but I agree it has no value at todays price.
During the capital raising Rampart's management put together presentations on Alaska that now look like they belong in the museum of hype if there is one.