Bought RIG at $47.70, my first purchase; probably a LT holding.
RIG fell from 93 to 42, April high to June low, a 55% decline. That created a nice double bottom with the 2008 low. Since then, it has climbed slowly, now only 14% above that multi-year low. I'm guessing we've seen the low, and are in an upward-slanting channel, now at about 47-55$.
I'm betting the ban on deep-water drilling in the Gulf will come under steadily increasing political opposition, and be ended before 6 months. I'm betting offshore drilling will resume everywhere, after a 12-24 month pause. I'm betting current events are not a game-changer, but a (big) bump in the road. And, most of all, I'm betting that at today's price, the bad news is in the stock.
Although it doesn't have the spill risks of BP, it also doesn't have the cash flow, balance sheet, and earnings consistency of BP. That's why I wasn't willing to buy RIG, until the oil stopped leaking, and the risks could be better quantified. |
