I'd sell now and wait for the tide to change. I sold most of what I had at that point, couldn't take anymore. I'll wait to buy at $3.40 but on the uptrend this time. Might not be soon but, I'll keep an eye on HERO for now.
Mike, I agree if they cold stack rigs, they will have to write down the values, thus lowering equity. They won't write down any ready stacked rigs. The carrying value of the working rigs in the gulf is probably in the 30-50 mill range depending on the rig. They usually write them down to scrap, say 2-4 mill per rig. Write downs hit equity/book value substantially.
When the CEO delivers some good news and new contracts....then I'll buy again.
Once he gives the same identical presentation that he's given 2 times in the past 2 weeks, we'll definitely see a sharp move lower. He's embarassing himself, the company, and all the hard working employees that actually lift a finger to do some work.
Longs realizing in the short term this thing is dead. Mgmnt stinks, to many stacked rigs, and lack of info. One of their best assets will not generate income for months. The book value is overinflated, as they'll eventually need to write down the value of the stacked assets if they don't go back to work. Disclaimer, I am optimistic long term, but short term it will be ugly.
Ok, look in the mirror at all the stacked rigs, two more in ten days. It could have been worse, but it is not good.
How far underwater are you on this jack up of a stock?
06-07 yields 6%, now we are at 4.5 or so, not bad, but yes based on the size of the investment base it would be a chunk of change.
I don't think HERO will bottom until after this Q's earnings report. I hope I am wrong and they announce some new contracts soon, but with the info from these conferences and recent news in the industry, the sentiment is to negative. HERO mgmnt seems none to concerned about the shareholders, so we won't get any help there. If they cold stack the 202 as Rynd indicated they would at Barclay's, does anyone know if they'll have to writedown the book value on it? and when?
Anyone have any idea if they had a new presentation? Paragon did, I'd imagine HERO just rehashed their canned presentation again. Rynd probably put the crowd to sleep with his horrid presentation skills. "We can't walk and chew gum at the same, but we think we can drill some of them there offshore vertizontal wells???duh"
Firecap' ... I like your strategy, good to trade for now. I sold my core HERO last week prior to the presentation and bought GNW. Drilling is to shaky and HERO's mgmnt is shaky as well. I think their inability to get the Super A's contracted long-term earlier this year was a huge blunder. Their optimism has quickly become pessimism, fortunately, Rynd did sound pretty sure they'd survive the current downturn. We'll see, they've got at least 6 ready stacked rigs in the gulf and 3 internationally, including the Triumph. I have to wait for a more rosy outlook before I can get back in with a substantial position. I can understand the confidence the shorts have in not hurrying to the exits, likely goes down more before up IMO.
Just sell on any 10 cent pop and then buy back in on the 20 cent drop. Aeron is right, easy way to increase share count. Still going to show paper losses, but with more share to profit when/if it eventually rises.
Golden tongue? Not sure I'd agree with that....seems unexcited and unmotivating when he speaks. Painful, he's anything but what you'd hope a CEO should sound like in public speaking events.
I am back in with a small position today. Last time in GNW at 4.36 held and traded all the way up to the low teens before moving onto other things. Always keep an eye on this one.
Good points, I just think we'll need the overall sentiment in this sector to change to the positive or specific news to HERO in order to make this thing move up significantly. I plan on trading around a small position until either one of those events happens. I don't think it will happen soon, unless Rynd is feeding us full of #$%$...which may be possible.
What will cause this parabolic rise in your opinion? I don't think we'll see anything parabolic anytime soon based on what Rynd has been saying. A buyout maybe....which would cause it to rise to whatever the supposed buyout price would be....at this point, fair value is probably around $4 as the outlook sucks currently for this offshore driller...I estimate Q3 earnings at 200-210 million, 15-20% lower than Q1 and 2. I was off by 5 mill to low on my Q1 and 2 estimates.
The move up Friday was probably the shorts tripping over themselves shorting more....after Rynd's presentation who'd blame 'em. It was awful, he sounded like he was constipated and couldn't wait to get it over with, so he could load up on metamucil and hit the big stall.