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HP Inc. Message Board

shbrom 9 posts  |  Last Activity: Apr 19, 2016 2:47 PM Member since: Sep 12, 2000
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  • Reply to

    Dom Perignon is flowing

    by lessbs Apr 18, 2016 4:45 PM
    shbrom shbrom Apr 19, 2016 2:47 PM Flag

    It's possible that she has made many new social contacts with the largesse she made by selling down her CLMT Units when they were more highly valued (as she was actively doing). I would guess she has become a major donor to various institutions in Indianapolis, too. And she has had more time for that charitable work since leaving Calumet. But while she ran things,...the decision-making was less than stellar.

    Good luck to the Longs.

    Sentiment: Hold

  • Reply to

    Small Cap MLP Fund

    by shbrom Mar 22, 2016 10:06 AM
    shbrom shbrom Mar 25, 2016 11:03 AM Flag

    Could you explain the logic of your final sentence, please?

    Thanks in advance.

    Sentiment: Buy

  • Reply to

    Small Cap MLP Fund

    by shbrom Mar 22, 2016 10:06 AM
    shbrom shbrom Mar 25, 2016 2:04 AM Flag

    Without going back to check the composition of the Alerian Small MLP portfolio composition, my recollection is that they owned 3x as much CLMT as LINE, measured as a % of portfolio. I generally buy more of the companies I believe will be successful, and less of the companies in which I have less confidence.

    As for looking at things long-term at CLMT, I bought some of my early shares almost a decade ago after the La. refinery upgrade fiasco, in the single digits (those were sold off profitably at a time when I trimmed my equity holdings generally) and eventually I replaced them with other, more expensive, CLMT shares when I adjusted my overall equity holdings back upward.

    You are correct that some of CLMT's ventures appear to have been disastrous. I agree with you. But they did what they said they would do re: distributions after that hiccup following the refinery overhaul disaster mentioned above.

    Did they stick to their knitting, as many successful companies do? No, they did not. They ventured into areas about which they knew little and purchased the frac fluid company at or near the peak of the market for such companies. I expect that Royal Purple will work out. The other items (e.g. the diesel plant) came onstream at a time that activity that justified the plant contracted. But the fundamental business of the company (specialty refining, solvents and lubricants) makes up the bulk of its value, not the commodity products.

    Does CLMT have a lot of debt? Yes, but not nearly as much as LINE, and we may be in a better position to pay it down when it comes due . As someone else on this board posted, the interest, though at a relatively high rate, appears to be manageable for now.

    It is often difficult to make the transition from a small, family-run enterprise to an entity requiring professional management, and sometimes it doesn't go well. I am happy to see Tim Go come on board and I continue to be optimistic.

    Sentiment: Buy

  • Reply to

    Small Cap MLP Fund

    by shbrom Mar 22, 2016 10:06 AM
    shbrom shbrom Mar 24, 2016 3:37 PM Flag

    I agree. Another point is that integrated oil companies (those whose activities may include exploration/production activity (=upstream) as well as refining, etc.(=downstream) and which are well run with low debt service requirements (e.g. XOM) have declined less than pure E&P companies.

    A startling contrast in the fortunes of pure upstream vs. pure downstream orientations in the current low-oil-price environment may be made by examining the performance over the last year or so of MARATHON OIL vs. MARATHON PETROLEUM (symbols MRO VS. MPC). One is upstream-oriented, the other downstream-oriented. It was popular at one time a decade or more ago to hive off one function from the other, so many companies separated refining (which was an unglamorous drag on earnings) from E&P, rather than remaining "integrated". The downside of doing that now becomes apparent with the recent oil and gas price collapse.

    The outperformance of refiners in the current O&G pricing environment is clear. Also, being well-managed with a strong balance sheet enhances the competitive advantages of refining. Too much debt can be a problem that even some integrated companies may have to overcome to survive. And the first cuts are to Exploration and Development budgets (Capex), for which areas massive layoffs and project cancellations have been recently trumpeted.

    Good luck to the longs.

    Sentiment: Buy

  • Reply to

    Small Cap MLP Fund

    by shbrom Mar 22, 2016 10:06 AM
    shbrom shbrom Mar 24, 2016 1:35 AM Flag

    CLMT and Linn Energy are in two different businesses. CLMT is a refining (downstream) company, whereas Linn is a finder and producer of oil + natural gas. For LINE, low oil and gas prices are a killer. They can't currently pay interest on, let alone pay down, their debt, and they have lots of it. They appear to be trying to restructure that debt through bankruptcy. They may or may not succeed in reducing their debt obligations through the bankruptcy process. LINE MLP owners, if the company is able to convince lenders to accept a reduction in LINE's debt load, will be on the hook for Federally taxable income equal to the $$ break they negotiate with lenders, yet those same owners will receive no actual income in the restructuring. This makes Linn energy VERY unattractive for the short term even if they are able to eventually turn the company around. Sometimes, in a Chapter 11 bankruptcy, the Debtor, even with forgiveness of a portion of its debt, is not able to engineer a successful turnaround. The bankruptcy, in that case, is converted to a Chapter 7 & its assets liquidated, with most proceeds going to creditors, and with little or nothing going to equity holders, who are way down the line in the payment scheme.

    Linn Energy is an upstream company and is being killed by debt. CLMT is primarily a downstream company and it can manage its debt, which appears not to be due in the short term (see an earlier post by me on that very subject). Current low oil prices are HELPFUL to CLMT, not harmful to it. Its raw material (feedstock) costs are lower now than at higher oil prices. That should make them more profitable and in a position to pay down debt as it becomes due.

    Your comparison is flawed. I am not saying bad things couldn't happen to CLMT e.g. if the economy craters and CLMT can't sell any of its products because its market has cratered and its customers no longer need its very superior products.

    Sorry for the length of this response.

    Sentiment: Buy

  • I see in this AM's news where Alerian has just created a new series of MLP funds. It is of note here that CLMT is weighted at 3.22% of its Small Cap MLP Fund. They obviously don't believe that CLMT has a "Going Out of Business" status as some on this message board contend.

    Good luck to the longs.

    Sentiment: Buy

  • Reply to

    New EVP Hire

    by stardine1015 Mar 7, 2016 9:21 AM
    shbrom shbrom Mar 8, 2016 9:45 AM Flag

    Is it possible that your post represents a manifestation of the historic Harvard (you) - vs. Princeton (new EVP, PhD Princeton) rivalry, rather than a dispassionate assessment of our new hire? Google "Harvard Princeton Rivalry" if you need more info.

    Look, many of the posters here have been moaning about the unlucky or ill-considered handling of refinery upgrades, acquisitions, delays in implementation, etc.. Many posters here expressed their frustration with the decision-making and costs associated with these past events. Some posters recently suggested the sale of some of the underperforming assets at or near the bottom of the market.

    Just maybe the new guy, experienced in the transactional end of our business, will smooth out these issues.

    Simply my humble opinion.

    Good luck to the longs.

    Sentiment: Buy

  • shbrom shbrom Mar 3, 2016 11:34 AM Flag

    Screwed: You are a person of many contradictions, including those in the post to which I am responding. Give it up! Disinfection has begun. You have few "crew members" who take you seriously. Time to walk the plank yourself.

    Sentiment: Buy

  • shbrom shbrom Mar 2, 2016 4:02 PM Flag

    Well, the sharks swimming around the dingy debris seem fatter this afternoon. If I had to guess, I would say there has been a bit of short-covering, which should now continue until the next quarterly financials are posted. This assumes no further blockbuster announcements from the company in the interim.

    The unit volume has dropped off substantially since the low was hit, so perhaps panic selling and short selling have already peaked. Just a guess.

    Good luck to the longs.

    Sentiment: Buy

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