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Strategies & Market Trends : Value Investing
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To: Don Earl who wrote (16275)1/26/2003 9:25:36 AM
From: TimbaBear  Read Replies (2) of 78714
 
Don Earl

So, to restate what I think is your idea here: You're thinking about playing VTS as a hedge against long term production shut-down in Iraq. If this occurred, then other sources would need to be brought on line to stabilize the prices. As this event unfolds, more demand for the type of formation mapping that VTS provides will mean more demand for VTS services. The perception of increased revenue for VTS would (most likely) cause an increase in the price of VTS stock price, which is what you would be making the play in anticipation of. So it wouldn't necessarily be that VTS would intrinsically be worth more (because they appear to lose money at what they do), it would be playing more toward "The Greater Fool Theory"?

I tend to agree with your suspicions that this administration hasn't really provided their actual reasons for this movement against Iraq, and I also tend to believe that catastrophe often awaits when the Generals (or others) make light of the chances of the "enemy" to resist.

However, isn't there another company that can be used for this hedging that would also provide the margin of safety of current profitability in case the scenario does not play out with a long term reduction in oil production?

Timba
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