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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Czechsinthemail who wrote (12952)2/26/1998 2:22:00 PM
From: Chuzzlewit  Read Replies (2) of 95453
 
Baird, Though I think Swede's argument that drilling-related stocks should be drawing more attention from value funds has merit, the pattern of selling the companies on oil price weakness may keep fund buying reserved until prospects for firming oil prices are clearer.

I've got to disagree with you on that thought. Value funds will recognize, as people in the industry have repeatedly pointed out, there is no connection between current oil prices and the profitability of the segment. Future profitability will be determined by drilling and exploration plans and the availability of rigs.

However, the Halliburton Dresser merger is not a confirmation of the undervalued argument because it is a stock-swap. Generally, companies use cash for mergers when they believe their stock is undervalued, and stock when they believe they are over-valued. This is not to say that I believe these stocks are over-valued.

Regards,

Paul
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