subtract $21bil owed governments, div bleed, land/asset writedowns and so forth you get like $20/share probably at best.
The truth is that If Russia took back Rosneft BP would be insolvent probably, fall to $8/share. Outside of that, fair value is like $22 probably at best. $29 is what we call stupid peoples prices.
then again I can't say this is so overvalued either. I just felt $11 was a good price point considering the issues. $16 feels really pricey after all. I mean POT is completely broke outside of land they cant even match ST liabilities at this point.
I'd have thought it would be trending around $13 by now heading towards $10.50-$11.50 but I guess it wants to churn a bit more before $14.50 breaks.
$21billion they OWE governments not reflected in the books/balance sheet yet.
1/3rd of all BP's assets/revs are in risky Russia, could be taken by 2018 or inevitably.
land/property assets are overvalued like all oil co's now and based on $90 oil probably.
$22 or lower incoming.
Boring actually. Wake me up at $23 or lower. The fact that this thing could lose 50% of its value in the future if Russia takes back Rosneft does not make me want this as a long term hold that's for sure. You're better off trading the stock intraday and selling it when it reverses than holding this garbage over $20.
Personally I'd never short anything because I have no faith in fair market mechanics by design, however that said, POT is not 'close to book value'. In fact, strictly speaking, book value is $8 or so, which is comprised entirely of LICENSED land assets. Further, if you argue that these assets are overvalued since the underlying commodity is worth less, you may get a $5.50/$6.00 book value.
Again, working capital is highly negative here, and they continue to distribute 100-110% of FCF/net earnings so the stock is not worth more quarter after quarter, only the holders bank accounts go up, but for a new stock holder the equity doesn't rise.
Lastly, under $200/ton would bring about negative earnings concerns. Unlikely but possible imo. Without any working capital, the div would be cancelled entirely and they'd go into debt more.
Either way, perhaps this spikes to $18.50 or something I don't know personally I wouldn't touch it over $11. So buyers best of luck, just stating my opinions.
if you think HFT is the only thing that exists as a conflict of interest and/or defrauding mechanism then that is hilarious. Actually it's like a hydra with about 50 heads, of which HFT is a single head. Market makers by design have a conflict of interest to make a profit and control/regulate stock trading as it is, lol. Thus, they employ HFT among other things to set prices. That's just one aspect.
Blah blah bottom this bottom that. Fundamentals just say this is now $2 more expensive and $7 now over fair value. That's all that says. If you wanna pay more go ahead, enjoy at $16.84 maybe this will take another several weeks to melt down further. Maybe months. Makes no diff really, we are all just discussing fundamentals. Any idiot knew that stocks that fall hard will bounce so they can redistribute and sucker more in on pops or just balance the transfer agents stock accounts. That said, the move today was the entire 2016 dividend that WONT be retained anyway lol. Its not very smart to pay a full years worth of non-retained divs based on a 24 hour move but hey, if you think its worth $17 knock yourselves out. I still say it churns a while then takes a dump
lots of goodwill after aquisition and land assets that are worth 40% less but aren't reflected yet. If $30 isn't fair value maybe $37 is then.
If you 'double down' I would do so on weakness, never on strength. Fair value is already far below current stock price by most assessments, I mean just quoting the average analysts target is $17, JP morgan is $16, stock is basically at both targets already. Not that I trust or care about these guys at all but they are likely looking at a combination of weak equity, negative working capital, lots of debt/dues coming due, and a horrible forecast they'll probably miss badly as well.
I don't know POT's rating but just quoting their lack of liquidity they should be far lower than A's. B or C is more suitable here.
A cross of $18 would be dangerous almost like a blowoff top if that ever happened imo. I always though that $14-$17 would be that churning before $14 broke. I'm not saying this thing can't go higher than I think but fundamentals certainly don't support it as we all know.
If this thing crossed $17.50 meaningfully I would actually just entirely stop watching it and check back in several weeks probably because that would indicate a lot more churning and time is needed before fair value is reached.
But my gut says $14-$17 then slowly $14 breaks and gives way to $13, $12, and inevitably $10 or $11 (probably $11.50-$12 primarily).
Either way, I suppose we'll see won't we.
awesome timefor, glad your doing well. POT seems like it wants to churn for a while, few days, weeks, whatever before the move lower. I fully expect $13 to break here soon. One glance at the books and the forecast and people eventually have to halt purchases til lower imo.
earnings are so low at this point as prices fall that lets say realistically they earn 75 cents for 2016or $500mil, quality notwithstanding. Ignoring 2017 which could be worse or better, ignoring any other costs involved in long term mining, the $500mil will be #$%$ away on divs, the stock will get weaker because there is no upside or growth anywhere based on pricing or realities and the equity will continue to be dead and illiquid. Still view $10-$11 as fair value. No doubt it will fall further in due time.
dead notwithstanding looked at their books again and they are completely and utterly illiquid. Negative working capital, debts coming due/trickling that are only secured by land and equipment, meaning they don't have any liquidity to pay any long term liabilities and assuming their ST assets are all of cash quality, they still don't meet ST liabilities. So POT remains super poor while they #$%$ away the little earnings they have left that may dwindle to break even or even negative results worst case.
Further, they have no cash or assets to take care of any capex or plans in the future so, like I told these guys, when you have a poor company run like a day laborer, you have to price in these things into the stock price. I don't find over $11 pricing any of it in.
lets just assume that 1/4th of all land assets will be written down on every oil/gas company that has yet to do so. maybe 1/3rd.
BHP Billiton writes down $7.2bn of shale assets
15 January 2016
From the section Business
"BHP Billiton has written down the value of its US shale assets by $7.2bn (£5bn) as a result of the dive in oil prices."
All the oils are around 20% overvalued imo, just due to risk, burn rate and playing catch up, BP is in a worse situation, it should be around $20 imo. XOM is also really pricey. People just have no clue what $30 or $40 oil means to the books. Probably assets of land and such are 1/3rd or more overvalued and could be written off. Equity would drop by around 30-40 billion on BP alone. The risk is too great for these things to be anywhere over their lows.