I like Oil

[MaddMaxx]

Quote:

Originally Posted by Jmlstocks I have to ask: Why would you hate a company that buys its shares back-that's a good thing if you're a shareholder

Share buy backs are short term stock price increases that do not help with growth at all, and from a company perspective, it also makes it easier to be bought out hostile in a depressed market as their market cap is smaller.

[Fermion]

OMG I wish I had purchased more NADL. Bought 5000 at $1.28 and today it is $2.25.

Like winning the lotto.

[dallas27]

Quote:

Originally Posted by MaddMaxx Share buy backs are short term stock price increases that do not help with growth at all, and from a company perspective, it also makes it easier to be bought out hostile in a depressed market as their market cap is smaller.

That doesn't sound right.

[papadad111]

Quote:

What's not to like about an EPS increase? Maybe they flubbed the timing and could have bought it back cheaper later, but overall it tends to be a positive sign.

Markets are efficient yet some times irrational - typically a buyback instigated eps increase is not as rewarded as an actual business driven (top line or profit) eps increase. Buy backs are more often interpreted by the street as a signal of underlying intrinsic value. However corporations are smart and at times use buy backs to prop up shares.

[papadad111]

So back to oil .... How are you all doing in this trade ?

[aaronc879]

Quote:

Originally Posted by papadad111 So back to oil .... How are you all doing in this trade ?

I bought SDLP at the perfect time. It's gone up almost 15% in the 20 days i've owned it. It'll be paying a 15% dividend soon as well. I wish I had bought more.

[dallas27]

Quote:

Originally Posted by papadad111 So back to oil .... How are you all doing in this trade ?

I'm feeling like their is another fall in the future, that's when i'm buying. Else, i will miss the opportunity.


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[RISP]

Quote:

Originally Posted by papadad111 So back to oil .... How are you all doing in this trade ?

Sold my tiny gambling position in Gazprom today. I made 20+% in just a few weeks, so I'm quite happy with myself. Might buy back in if it drops, say, 15% or so.

Quote:

OMG I wish I had purchased more NADL. Bought 5000 at $1.28 and today it is $2.25. Like winning the lotto.

Ugh, that stock doesn't look so great today. But still a very nice gain.

[ChiliPepr]

Quote:

Originally Posted by MaddMaxx Share buy backs are short term stock price increases that do not help with growth at all, and from a company perspective, it also makes it easier to be bought out hostile in a depressed market as their market cap is smaller.

You are right, it does not help with growth, but should help the share price.

Quote:

Originally Posted by dallas27 That doesn't sound right.

I do not believe that is correct ...

If the company has 2 million shares outstanding at $10/share the market cap is $20 million dollars.

If that company buys back 1 million shares, the share price should rise to $20, keeping the same market cap of $20 million.

Market cap, share price and shares outstanding have a basic formula...
All three of these are basically the same:
Market Cap = #Shares Outstanding * Share Price
Share Price = Market Cap / #Shares Outstanding
#Shares Outstanding = Market Cap / Share Price

If you change one of the variables, something else much also change....Reducing the number of shares outstanding (a buyback) should increase the stock price assuming nothing else has changed.

[Hamlet]

You're forgetting that the company is also reducing its cash to buy back its shares. The total market cap should go down by the amount of the buyback, assuming that the market is efficient and that the shares are fairly valued (big assumptions). It's the same company, just with that much less cash on hand.

Ultimately, whether a share buyback is a good idea depends on whether the shares are over or under valued.

I like share buybacks in general, because I feel that the management of most companies is not competent to expand their business by acquisition. If they can't expand their core business, for the most part I'd rather they just send me the money, since they are likely to waste it expanding into something new.

The drawback is that companies have an annoying tendency to buy high and sell low with their stock buyback plans.

Quote:

Originally Posted by ChiliPepr I do not believe that is correct ... If the company has 2 million shares outstanding at $10/share the market cap is $20 million dollars. If that company buys back 1 million shares, the share price should rise to $20, keeping the same market cap of $20 million. Market cap, share price and shares outstanding have a basic formula... All three of these are basically the same: Market Cap = #Shares Outstanding * Share Price Share Price = Market Cap / #Shares Outstanding #Shares Outstanding = Market Cap / Share Price If you change one of the variables, something else much also change....Reducing the number of shares outstanding (a buyback) should increase the stock price assuming nothing else has changed.

[MichaelB]

Quote:

Originally Posted by aja8888 for now, the offshore drillers are really in a pickle. Rig is under $20 and if oil stays low, say under $60, they and other offshore drillers have a big problem. I suspect rig will dump the dividend soon.

From the FT http://www.ft.com/intl/cms/s/0/ddf3b...#axzz3Rvvk8htl

Quote:

Transocean, one of the world’s largest offshore drilling contractors, is cutting its dividend by 80 per cent, in the latest sign of how the plunge in oil prices is hitting the industry. ./. Transocean said on Sunday night that it had lost its chief executive. Steven Newman, who led the company for five years, stepped down on Monday in a move that was described as “mutually agreed” with the board.

[gcgang]

http://www.smh.com.au/business/world...18-13i71u.html

Warren Buffett just sold his XOM.


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[target2019]

Quote:

Originally Posted by gcgang Warren Buffett sells $4.7b Exxon stake in global oil rout Warren Buffett just sold his XOM.

Yes, he did. I wonder at what point in 2014 4Q they threw in the towel.

Quote:

Berkshire's 41.1 million shares of Exxon cost on average $US90.86 apiece in 2013, according to the latest annual report. A regulatory filing Tuesday showed Buffett sold the holding during the fourth quarter. The oil company traded for an average of $US93.27 in those three months, so Berkshire could have sold the stake at a profit. Scott Silvestri, a spokesman for Exxon, declined to comment.

I'm hoping this leads to more selloff, as I am waiting for $89/share.

[aja8888]

I'm thinking that crude oil will take another good sized dive later this year as inventories are very high. This may be why Buffet sold out.

I suspect there will be a couple of years before the oil game gets sorted out worldwide. Even then, it may be a wild ride from time to time. Commodities are a tough bet.

[Lakewood90712]

Quote:

Originally Posted by target2019 Yes, he did. I wonder at what point in 2014 4Q they threw in the towel. I'm hoping this leads to more selloff, as I am waiting for $89/share.

OK XOM is there. I'm going to wait a while myself. Same for Chevron.

Might even go for transocean as a "put it in the freezer " buy. At $12 ? Transocean’s stock tumbles toward two-decade low - MarketWatch .

Feel sorry for the folks getting hit with layoffs.

Drilling will have to pick up sometime in a few years , and money will be made again.

[target2019]

Quote:

Originally Posted by Lakewood90712 OK XOM is there. I'm going to wait a while myself. Same for Chevron. Might even go for transocean as a "put it in the freezer " buy. At $12 ? Transocean’s stock tumbles toward two-decade low - MarketWatch . Feel sorry for the folks getting hit with layoffs. Drilling will have to pick up sometime in a few years , and money will be made again.

I've decided to wait for $85 on XOM, meaning 3.25% dividend. I think there is more to shake out for XOM and CVX.

[Running_Man]

Quote:

Originally Posted by dallas27 Crude prices seem like they are entering a price range that is unsustainable long term. Seems like a softball pitch to me. USO/UCO is where I'll be in the next week or two, probably UCO. Argument against Oil rebounding significantly in the next 3 years?

update on this thread as we approach the end of the 1st quarter, important because companies start to give companies outlook for the year and actual projects have to be cut. Crude Oil inventory is now approaching 100% of capacity as production, despite dropping rig count continues to be higher than consumption. Thought I would update what has happened in the 3 1/2 months since the start of this thread.

UCO which was down to 16.60 from 40 as a high bouncing point the last two years. Now UCO is at 6.96 even down 6% today from a 80 percent decline today from its 2014 high. A drop of 60% from the start of this thread.

XOM had a one year high at the start of this thread at about 105, and had fallen to 90 at the start of this thread as bigger oil seen able to handle this "temporary" price fall, down about 15%. From the start of this thread since then it has fallen another 8 percent to 83 despite an intermediate bounce to 95. Interestingly, 90.5 was the price Warren Buffet sold out of Exxon.

COP had a high of 85 and was at 66 at start of thread now at 61 with an intermediate bounce to 70.

CHV was high around 130 dropped to 108 at start of this thread had a bounce to 112 and now is at 101.

PEO the CEF I mentioned was at 24 down from high of 32 bounced to 25 and is now at 22.50.

NADL had a high of 11 in 2014 fell to 2.43 at the start of this thread, the drillers and not the multinationals being about the worst hurt, an 80% drop and since has continued to fall another 65 percent to 1.18, down 0.1 today which is a 10%. This stock is the living embodiment of the sage "never try to catch a falling knife".

[dallas27]

Quote:

Originally Posted by Running_Man update on this thread as we approach the end of the 1st quarter, important because companies start to give companies outlook for the year and actual projects have to be cut. Crude Oil inventory is now approaching 100% of capacity as production, despite dropping rig count continues to be higher than consumption. Thought I would update what has happened in the 3 1/2 months since the start of this thread. UCO which was down to 16.60 from 40 as a high bouncing point the last two years. Now UCO is at 6.96 even down 6% today from a 80 percent decline today from its 2014 high. A drop of 60% from the start of this thread. XOM had a one year high at the start of this thread at about 105, and had fallen to 90 at the start of this thread as bigger oil seen able to handle this "temporary" price fall, down about 15%. From the start of this thread since then it has fallen another 8 percent to 83 despite an intermediate bounce to 95. Interestingly, 90.5 was the price Warren Buffet sold out of Exxon. COP had a high of 85 and was at 66 at start of thread now at 61 with an intermediate bounce to 70. CHV was high around 130 dropped to 108 at start of this thread had a bounce to 112 and now is at 101. PEO the CEF I mentioned was at 24 down from high of 32 bounced to 25 and is now at 22.50. NADL had a high of 11 in 2014 fell to 2.43 at the start of this thread, the drillers and not the multinationals being about the worst hurt, an 80% drop and since has continued to fall another 65 percent to 1.18, down 0.1 today which is a 10%. This stock is the living embodiment of the sage "never try to catch a falling knife".

thanks for that. I haven't bought in yet, I have been waiting for just a little more fear than we got. I've also been watching that capacity approaching 100. I think that will be the next pivot-able event. As soon as the headline reads "too much oil" because we can't store it anymore, I think that's the drop to buy into and when dominoes will start falling.

[petershk]

XOM and NOV are my favorites... Buffett notwithstanding.

Both companies have dividend payments alone that are bigger than my post tax mortgage interest rate .

That said I think you have to tolerate a year , 2, 5? of volatility and returns are likely "modest."

I don't think the oil economy is shifting in a major way for at least a few decades and I think the pain in oil is a showdown between mainly US frackers and OPEC. Eventually someone will flinch. Companies like Exxon and Varco win in that out one either way and have the balance sheet to survive pretty comfortably.

I think both companies have a 3-5%/year long term return on the downside and maybe 10%+ on the upside. Compared to long term interest rates and existing market returns that seems really good to me.

But of course you have to agree with the assumptions.

Garbage in garbage out

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[Brat]

I think the Saudi's are primarily playing Iran and Russia in this game. They hate Iran who is very dependent on oil revenues and Russia is Iran's friend who is also dependent on oil. ISIS is a threat to the Saudi kingdom too but I think their oil business is convenient collateral damage. Our production is a drop in the bucket in comparison.

I agree that Exxon will manage their way through this. A refiner like Valero would be another stock to consider.