It is sort of amazing that we are still up considering the market is down 300+. Generally even good news is hard to overcome theses down drafts. However, there is not a lot of selling but no buying in general today. Just no volume in stocks like FB. BGS on the other hand has volume 4 times the recent daily average.
They cannot spin off the chemical business. There are covenants in the JV that prohibit that from happening without CVX OK and it is doubtful that would happen.
I still own COP from the split and there is nothing wrong with it long term. Oil will go back up because of the reduction in investment. Current price does not allow for enough investment to make up for the 6% of daily production that is lost due to depletion every year. Contrary to popular belief demand worldwide is actually expanding. After the split I loaded up on PSX which I thought was the better investment when it in the $30 - $40 range. Unless you are glued to a tube full time trading is a fools errand.
I also have a significant holding in PSX. The question here is this a precursor to a takeover ala BNR or just an investment that BRK holds on to like Coca Cola. The last time he owned shares he swapped them back to PSX for some asset that BRK wanted for their energy business. Their energy business is huge and Buffet has been adding to it for years. I believe that BRK also has a high level exec who overseas all the energy companies. Regardless it takes 10+% of the stock out of circulation. In this case it does not juice the EPS but shrinks the float and along with that shares that could be shorted.
Where I differ from you is that after a month or so this will be forgotten and the company will move ahead on its own merits because refining is a boring business and most investors do not even know about all the other goodies that PSX owns. My biggest concern been that PSX is included in some ETF's with the likes of XOM and CVX and gets taken to the cleaners even though low oil prices are generally good for refiners. The worst think that can happen is to get taken out at a premium and then have to invest in another business. My wife and I own these shares in various IRA accounts so I am not concerned about taxes.
General Mills is said to have also received offers from the French food group Bonduelle and the private equity firms Cerberus Capital Management and Platinum Equity. You are right B&G will not break the bank to make a deal. But why is there a report that they are in talks. If it was definitely a no go I do not think we would have even heard their name mentioned. There are lots of ways that you can juice the EBITda especially when a company is sold to another. I see this all the time in the pipeline business. I am by no means an expert in the food industry so it was just a WAQ.
Futures contracts seemed to bounce off the old bottom reached earlier this year. A test a survival for now and also a double bottom. Demand has been not the reason for this collapse but over supply which happens when there is a bull market in a commodity. The fact that it is pretty easy to develop a shale field compared to say deep water drilling, volumes ramped up pretty fast. I think the lack of investment will mow bring things back into balance. This may not be the absolute turning point because there are still large volumes of crude in storage. Finally do not just focus on WTI but also Brent because many of theses large US based companies COP, CVX, XOM and OXY all have significant overseas operations and $50/ barrel will really help out.
PSX was around $82 when you wrote this message and now $76 - $77 after tanking down to around $70. I do not think PSX is over valued but unfortunately part of some ETF's that include all the big companies. So we have to accept the fact that it does not trade on fundamentals. I liked this company from the split and bought a lot when it was under $40 and the gyrations do not concern me. % years from now nobody will even remember this little glitch except if you sold out and never got back in. I do not know how they calculate the PE in Yahoo, but based on next years estimates we are just under 11X earnings. Higher than most refiners but they don't have the 50% ownership in a good chemical company or all the midstream assets
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Why would it tank? Based on the last conference call I do not see Miles paying 21 - 22 X earnings for STJ when ABT is only 15 X. That does not make sense at all. If you stop and think about it it would be a bad deal and the stock would tank.
When you look at VVC over 40% ot the shares are owned by individuals who probably like the dividend. Most of the rest probably by utility funds and ETF's It is not a very big company, does not move a lot and therefore of little interest to fast change artists on wall street. However, we are down about 17.5% due to interest rate issues. VVC probably ran up too high when everyone was looking for yield and now has overshot on the downside due to impending FED tightening. We are trading at 15.5 X next years earnings which is not cheap. Personally I do not think long rates will go up that much and so VVC should do OK. The last time the US had an episode like 2008 - 2009 was in the 1930's and it took all the way to the 1960's for long rates to recover. It took us from 1980,s high inflation to get where we are now and things will not spike up again for years. The best thing that happened to VVC was getting rid of those two energy supply business and coal mining. If you noticed since then earnings have perked up and the dividend was increased by 2 cents per quarter rather than 1/2 cent. In the last couple of years it has turned into a nice steady company. Part of the reason I own VVC is because I am a natural gas customer.
The problem with coal is not so much global warming (which is a joke) but the acid rain it produces. There are a lot of areas on the east coast which have suffered great damage. Lakes where all the fish are dead etc. With scrubbers and other equipment to clean up the smoke stack discharge many coal plants will be around for many years. You just cannot replace all the plants. I do not think the idiots have any idea about the volumes of coal used and what it would take to replace it. As far as using other forms of energy, gas has limits based on where the pipelines run and the ability to add new ones. The same idiots who want to do away with coal don't want a pipeline running near where they live. Solar and wind have a place but the grid cannot handle a high percentage of those forms of power due to base loan requirements. Outside of the wind corridor running up north from Texas it is not as reliable as one might think. Solar is great across the southern part of the US but it is still in its infancy. So we do need to move into the modern world but must do it smartly.
As we can see PSX went down around $12 from its recent high. There does not seem to be any rational reason for these swings but getting caught up in the energy space down drafts. In the mid west the BP refinery issue allowed everyone else to jack up the price so the other refiners should have done pretty good. For someone who wants to get in this is a good time to start a position. It may go back down again because I do not think this market turbulence is over. I was actually looking at it the last few days but already own a lot and will be adding in some none energy areas.
No if that were happen you would get on the end of a line at a soup kitchen because that is the only way you will eat.
There was at least a bid for $50.84. The first trade may or may not have occurred at that price because it quickly spiked to over $60. There was a lot of program trading in the being machine to machine driven by algorithms. Even so it is impossible to trade because of the gyrations and the tremendous volume. Very difficult to get the price you want.
TIS managed to keep most of the gains since the last earnings call until Friday. I also see some of the stalwarts like Colgate also got hit. Looking to buy more depending on were we settle out. TIS has rising revenues, improving profitability, expanding production facilities and more importantly little currency risk. Anyone have anything to add?