This is so similar to last round. If you recall, the price was around $54, tailed to $52.70 just before dividend providing a shiny lure. After dividend, the mine caved in on the price supremely damaging the whole effort of attaining a cheap 2%. This looks like a replay, only marked down $10 this time with the prospect that the $42 is being tethered to a sewing string ready to break after any dividend treasure hunt is over. And what could stop it from snapping, given the re-newed oil price lows and the general market meltdown. My view this moment is that we justify being back down in the $36 range.
The exact day (today) we see another 5% plunge in oil price, threatening to ply lower than the $27.56 low, the new bummer budget plan has a $10 tax proposal per barrel. We know it won't be considered. That's not the point here. What is the point is the idiocy to extreme, the Nero we have as a country have elected to fiddle. You can re-write Rome's decline fully understanding how it occurred, because we live it every day now. As to this; I would let this oil downturn play further mid-week before diving in here. The last time the oil price went this low, Rd was dancing in the high 30s.
I am glad you avoided today's carnage. As soon as the mid-day fall in oil came yesterday, it was clear that last week's party was over. The bubbling up from $37 here was just too far, too fast, too speculative. There is a lot of emotion circulating, it appears, from our thumbs up thumbs down gradings. I thought the idea was to express unvarnished opinions and let the electorate be illuminated or left in darkness, as they wish.
I exited last Thursday taking a 1-day bump. This has run up too quickly based on bg euphoria and saudi-russian inventions. I will sit this out pending the sell off, oil being down 6% at mid-day. Combine that with expected horrific earnings with refinery not helping as much in the midst of all this, and you have the makings of a fall down the same stairs it just climbed.
got in for some fun as well. Core Industries ceo calls for oil demand production balancing by 2nd half of this year. at least the price going into dividend is less than last round, that we know. Chatter between Russia and the Saudis is what is needed to percolate. I'll buy the Vodka to grease the discussion if that will not be too offensive to Sunni sensibilities.
An oft reminded but readily forgotten syndrome. I hit my guess, be it coin flip or roulette ball, 5 times in a row, doubling up each bet. I adopt an invincible attitude. And as you know, I lose my 6th try, betting all in. I was superbly 5 for 6, but busted out of the game. I think the same syndrome keeps people clinging to their stocks well into a bear, since they guessed right letting it ride for six years running with the bulls. Same invincible feel. And perhaps all that success was not necessarily a good thing if it leads to the last roll that takes it all down.
It is ironic that a dividend carrot has that siren effect of luring. The influence is so overwhelming that it blinds. Plus the mere age of the institution itself and the implication of longevity. I don't make light of the losses. It is with more sadness that the observation is made, that people's life savings through this company would be scooped away so rapidly. We know of the outside influences that cannot be controlled. It is the plodding mentality that is hard to accept. We hear now of more impending staff reductions. This should have come 9 months ago. No, what came 9 months ago was not reductions, it was in fact the opposite, an acquisition of incomprehensible size in an environment where the oil price declines had already become known. No, it is the self inflicted wounds that carry the most pain. And so we have a generation of people financially impared in 2008-2009 and yet still scarred; now we have another set in 2016 that will endure the same.
from not so long ago, but after this 56% drop, would have lost you $557k leaving $442k to muse over. That's right. You'd still be suffering even now on what to do. I see another 10,000 have been lined up in front of the firing squad. But let's stop thinking about the little people. Time for a winter holiday in Davos.
I think Turbo must be trying to talk the price down, giving his unending justification of the merger. There is no other explanation. Other than ridiculous. Gee, I'm glad I know now that it is natgas related. Had no idea.
I was thinking the same, yet Yamada prognosis for possible 14000 dow sticks in my head. You might get your reversion to double bottom as soon as today. However, this time it might push down through the bottom.
Yes it does make perfect sense. And there are some sages on this board still posting that Bg is a good idea, because their beloved leaders in Shell must be right. Again, married to the stock. Divorced and re-married. Divorced and re-married. Rediculous. Someday, just someday, will be a great time to buy. Uh huh. Well I would think. There is no doubt that if you have 10 years to wait, anyone ought to be okay getting in somewhere low and hatching an egg. That's a strategy? I'd like to see the annual P&Ls on some of the investors who promote that kind of thinking.
I added a modest position today. Will not add or detract from it, but prefer not to look at it ever again if I can summon some resolve. The premise of acquiring is pure gaming. Solely gaming. It premises some kind of unforeseen event affecting oil supply. That's it. No science. It's either this or a trip to Vegas. Same thing at this stage. Not a shred of investment theory involved. Zero.
Qualifies as misbehavior. Van Burden, intentionally mispelled, has presided over a steadily diminishing enterprise since his takeover in 2013. Now we have the winterized Dutchman flushed with prideful pride in defense. I said this was a disaster back in April 2015 - was criticized as not knowing better than a gaggle of financial wits staged at the Hague. All crazy for gas like good Democrats. Well, here we are engaged in a great civil war that will encompass the entire month of January. In the midst of this early morning Fredericksburg charge through the fog, there is the 4th qtr results to deal with and possible mid-month profit (or loss) warning press releases to duck. Keep one thing in mind always - the ones making these decisions can always take their parachutes and walk away after bad decisions. You can't.
Yes, I have had long associations with them as well, both as contractor and employee. It seems as if they have chopped through ceo's like hamburger meat during the past 12 to 15 years, skinning Shell US along the way as an insult. I know a good many long termers in the company. And of course this thing is over a hundred years old so there are generations before - you would expect that an old ship would be run by sofer Dutch who did not scate down the road to Rotterdam every weekend to imbibe in jenever.
I don't have the same beliefs. There are too many ex-ceo's sitting on the beach enjoying their parachute money while others work a few more years to cover for the bad decisions they made. Avoiding a love-fest until death investment is precisely what might avoid being driven crazy. Have for averaging down, I concur with Ray's comments on the subject. It works if you are positive about prospects and think a little inadvertent burp down was wholly unwarranted. It does not work if you're parked in the middle of a sandstorm and cannot see in any direction. Then, any move is a gamble. A thing to keep in mind is this entity is now netting less profit than your corner coffee shop. The only thing keeping it dangling on a thread is the borrowed payout.
Your point is a good one since Shell stock price at acquisition point affects the net realized price. I think current realized price is $62b as compared to the April $70b offer. However, I think that is precisely why the dividend guarantee was for only 2015 and 2016, i.e, the acquisition interval, to offer some stabilization. No guarantee was made for 2017 as far as I know. If someone has heard something different on that score, please shout. If guarantees were made for 2017 and beyond, that would make a huge difference.
I think the Hague mob views themselves as new-age greenees. They bought onto the gas bandwagon believing it the future. They wouldn't miss a photo op with a Euro lib on the subject of global this or that. Remember, they're globalists. You're worth $150. Would you, at today's acquisition price, buy a $62 addition that is in as bad shape as yourself. No. And would you, in your justifications of it, admit that you need to sell $30 of "non-competitive" assets to make it work. Huh? As I said, there will come a time when dividend reduction becomes a lever to pull in my very reluctant humble opinion. Then, heralded as a brave decision by the bottom feeders who will clean up thereafter.
the $38 could be if a dividend cut of 40% commencing 2017 is assumed. That would yield, then, 6% and the then still relatively high rate would serve as justification for the Dutchman, if he is still around by then. The lack of guarantee for 2017 has a reason behind it, that being another 'lever' to pull. The effects of this uncertainty for 2017 are going to be felt soon in forward pricing by the market as no one wants to be left holding the bag. For the underyling business environment uncertainty, we need at least junk return status to justify the risk, which would be at a minimum the 6%. The absolute baseline, since the market would then expect future possible reductions beyond the 40%. Ray, the difference in my thinking and yours is that you think the general market will do the dirty work to get to that price - I think the actions taken within the company itself will accomplish it without much help from the market. Judging from the latest Opec meeting, there will be no miracle in 2016 from oil forthcoming.
Recall that Bg has several moving parts: stock issuance amounting to add'l 8% of float, cash payment out of available cash, add'l debt incurred to rest of purchase price, and incremental add'l div layout of $3b. It's the hard cold sweat of the unknown being on a powerless sailboat sitting in the middle of the Atlantic with no wind for days. Believe me, these guys in the Hague don't know what to do at this point either. And they are too proud to punt so they are going for it on 4th down from their own 20 yard line.