Big Bull/SargeK re: FGH & can't you guys let a guy take a quiet cruise ?
Man, my ears were ringing something terrible around St. Martin...
Big bull - per your comments on Yahoo about giving us a history lesson on Deepwater; re:
messages.yahoo.com
Big Bull; in all honesty, all you are really saying is that people point to deepwater as the future. That is nothing noteworthy, nor is it something we all don't allready know.
I ask you instead to focus on what Big Oil has done lately, is doing now and is going to do in the nearterm with their money - ie: look at the pitifull GOM offhsore lease sales of late, all the projects put on hold - the lack of any substantive Cap Ex expansion beyond prior expenditures in Deepwater and I say look at reality, not theory. If you want to make money - look not to the future without closely factoring the "time value of money" - and more importantly, look instead to where those with the money are putting the money - not their mouths.
The "future" comes with a "time value of money" cost Big Bull - and that is what you are missing !
Sure, we all know deepwater is the future - maybe, not to the degree that you think it is, but - you must factor the time value of money into the equation when you translate that theoretical & philosophical "future" to actual real-world "present day" stock shareprices !!!!
ie: Dont quote me theory - show me the money ; but you wont need to show "me" the money, because Slider is allready following it (VBG) - and it "aint" in Deepwater presently !
I also think most here are missing my entire point. The "emotional obsessive" nature of the FGH zealots here & on Yahoo has blinded many to what I am "actually" saying about FGH.
I am not saying FGH is going bankrupt. I am not saying that the fab subsector, or FGH in particular, is not potentially at the right time of the "Boom cycle" going to be a great long play, nor denying that it "WAS" at one time a great long play. It may well be again someday ? But it has not been of late and it is not now; nor does it look to be by any reasonable fundamental, or technical indicator in the near future.
There seems to be this mindset that only "you" guys know about FGH, that somehow the "market, or the "street" doesn't get it ? - Trust me; they get it ! - you guys dont...
What I am saying; is that what can not be denied is that there has been a lot of upward movement in stock prices here in the patch since the downturn in the oilpatch ended with a capitulation to near OSX 45-48 last fall.
Here are some returns from those lows on that infamous day on Aug 27th 1998's capitulation:
Service co's:
BJS +218%
SII + 154%
WFT +132%
CAM + 101%
Shallow/Jack up Drillers:
RDC + 96%
ESV + 95%
Deepwater Drillers:
DO + 8.94%
RIG +7.75%
FLC +3.63%
... do you guys "now" kinda get a clue to how the market feels about "deepwater" ? The market is focusing on the "money" - where the Oil Majors & Large Independents are putting their money behind their mouth; not just where they point to the future being... Simply "follow the money" !
We all know the great technological leaps in deepwater driller & subsea technology - FPSO's etc. There is tremendous future in Deepwater - that's a given; so don't confuse what I am saying. I fully realize the bright future for Deepwater, I prefer CXIPY CDIS SCSWF OII vs. FGH here, but there is also a very bright future in Nat Gas - onshore & shallow water and THAT is where the money is - not the talk. There is tremendous future opportunities on land in the middle east (obviously), The USA, Canada, So America, Australia's oil sands, and Asia. "Deepwater" does not quite have the ".Com" degree of "magic" and the upside that you guys think it has in the nearterm imho. Surely, there will be a continued gradual shift over time in Cap Ex spending more toward Deepwater - and any acceleration in that shift will be reflected by the forward looking anticipation by the market. Anyone seen how the great "Caspian Sea" story has collapsed ? How about the North Sea - which is now really the "DEAD SEA" ?
Folks there is a glut of Deepwater capable Offshore Rigs presently - Dayrates are the barometer for demand - its just that simple. You want to know FGH's future - watch Deepwater Drillship & offshore dayrates - period ! - we've all learned that it is NOT - merely "the price of Oil - Stupid" - didn't we ? Remember the post I titled - "It's the Cap Ex Spending - Stupid" that you guys flammed me on ? Remember all the times I've been chastised for selling & taking profits ? You guys chastise me for allegedly "missing" MEXP ?!?! hardly , I have flowed up & down with this sector - never getting emotionally attached to any individual stock, nor to being long vs. short. That "concept" seems to not be understood, or at least looked upon as being a "traitor" in some way. Folks - these stocks are inanimate objects, merely vehicles for generating income - period. They are not family members, or pets, nor the "home team" - get that concept and you may survive trading and actually make some money some day...
While there is a plentifull supply of offshore rigs presently; there may not be 3, or 5 years from now. But, that "time value of money" for that 3 to 5 year bright future doesn't do much for todays shareprices. Thereare plenty of analysts, plenty of Big Oil Ceo's, Drilling Co Ceo's, Bankers, Analysts and "obviously" the "MARKET" that thinks with its money where its mouth is - that Deepwater is NOT the "hot" ticket that you all seem to think it is - on a "time value of money" basis. Or, perhaps more correctly - that it is "fairly" valued for the degree of "hotness" that is, or isnt there (VBG).
If it was the "be all - end all" that you seem to think it is; then why are RIG DO FLC (the construction boom posterchild) the dramatic underperformers of the OSX land ? - compare those returns to the "mo-mo" nuts & bolt service companies, or the shallow water, or land drillers as an example. How do you explain that disparity in performance ?
Are the fab sector brethern of FGH, like UFAB & GIFI not also severly lagging, was HLX not in trouble ? - this is yet another clue...
Now, to really see how FGI/FGH is thought about by the real "experts" - those Institutional Investors who have the "real" money that controls prices here -just look again at all those return %'s on all those companies above!
FGH is down a minus - 40% while ALL those companies have had those huge upside gains. That is the rearward looking longterm picture since last aug/sept 1998 ! - over the shorter near term past here - FGH has really been a nightmare. FGH vastly underperformed the deepwater drillers, who in turn vastly underperformed their more shallow & land oriented peers - Reality vs. perception.
Recently over the last 90 days or so; stocks like SII CAM WFT ESV RDC UTI are up about 25-30%, while FGH is down about 35%; that's a huge swing. The loss since the cyle peak for those who bought FGH in the $40's, the $30's, the $20's, the $teens - is staggering. Folks - this was a damn $40+ stock and now is a $6 stock !!!!!!!! - do you guys really think the "MARKET" has made a mistake of this degree on FGH ? - hardly...
I am not pulling "theories" out of my a$$ folks on why FGH has been such a "piece of $hi^" stock - and those adjectives are appropriate for its performance - "POS" for the PC crowd.
I am not trying to drive the price down lower so I can buy it cheaper, I am not short here, nor have I been short for some time. That is on the record. What I am - is intrigued by the investor psychology of chasing these crash & burn stories; thinking that these stocks will recover to their former glory and that they will do so anytime soon. I got "ass bested" by MDR - and I sold and took my losses like a man. I then caught BHI for a nice margined trade. Sat in some cash and margin leveraged VPI PXD and XTO to a large degree here of late. If I had not taken my losses in MDR and continued to load up and average down to the depths of hell, I would never had been in a position to make these recent very , very profitable trades. That is the true cost of holding a "deadmoney" stock - missed opportunity !
To sit in deadmoney - obsessing, refusing to acknowledge reality in MDR would be insane. It would be purely "emotionally" investing and not "logically" investing/trading. "Emotion" will cost your more money than anything else in the market. Don't get obsessively attached to stocks. I have cheered MEXP long and I have shorted it with equal zeal. I played CAM short - then long; all last fall into early 1999. This isn't "family", or even the "hometeam" - its okay to love 'em & leave 'em; really, it is... (VBG) ~
FGH from $40 to $6 is not merely a retracement; it is an "ass whipping" a stamp of being a "pariah" - an "abhorrence" to get crushed to that degree by the market; that is what the "market" is telling you it thinks about FGH's former valuations and its present & near future prospects.
There are numerous analyst reports where these analysts have spoken to the Oil Majors, the large Independants, the Investment Bankers and the Driller Ceo's on the subjects of Cap Ex spending and specifically newbuilds in Offshshore.
Folks - there is no secret that there is "no, nada, zip, zero" major new construction boom coming ANYTIME soon. - "soon" being the next 18-24 months.
I think that 85% of the longs here probably have a cost basis of about $15 - $20 due to the length of time they've been posting, talking about holding, not selling etc. FGH needs to double and triple for many, many investors to merely break even here. Another of my main points is that it really doesnt even matter any more for most of you... sadly.
That is yet another major point - that it is way, way past the point of where you should have exited and where I went "short" on FGH. (now covered & no position)and started commenting on the fundamentals underlying its decimation in addition to all the negative PR it was getting via the "espose'" articles by The Street.Com etc.
The advantages of taking a tax loss deduction to offset what has been one of the most profitable years in the markets history, is a no-brainer. Only someone who has their entire holdings in FGH (Sargo ?) would have no reason to take the loss - allthough you can carry it over for future gains in 2000 ! That so many are going to see this deduction vanish shortly is sad. It is not as if you haven't continually been able to buy FGI cheaper since last May, or so has it ? Does anyone "really" see anything that's going to take FGH off the radar screen any time soon , to where you cant "re-buy" soon, cheaper - or near todays prices ? Sell & rotate into another stock - hell, you may even surprise yourself and actually make some money for once ? - just do it ! Sell & throw a damn dart; I'd bet you outperform the Pied Piper Obsession Train...
What is even more sad, is that while they've lost 40-60% in FGH while the rest of the oilpatch has doubled, went up 30, 40 - 60% (see the comparison performance stats above); they are now going to miss yet another opportunity to catch the positive momenteum in the oilpatch here and sit in this deadmoney stock that has no fundamental future in the near term - with horrible allegations, both public & private, with terrible press - TheStreet.Com expose, the HLX investigations, the Canadian Govt situation etc. This is even minor - compared to the triage on the backlog and the tremendous "wait & see and show me the money" attitude that the "MARKET" is taking on how FGI assimilates HLX. There is simply no reason for the institutional mo-mo money to flow to FGH here before they prove via earnings reporting & major new orders that the merger is successfull, that they have stopped the carotid artery bleedout of the backlog and hopefully clean up their image a bit as well.
Why would money flow to FGH here versus, NE ESV UTI CAM WFT SII BJS ? compare the earnings outlook, the momentuem in the stock, their relationship to the overall industry cycle peaks etc.
FGH is at best a bit of a "deadrat" bounce play - pun intended. But, it is also with much, much greater risk imo, because of the unknowns concerning how the merger is assimilated than say SII BJS NE WFT UTI et al. Anyone who thinks that FGH is going to go anywhere real fast, or outperform the sector nearterm - is going to get what they deserve.
There "may" be a time to return to FGH, but what is so amusing; is that there will be glaring technical and fundamental indicators of when that time arrives. Sure, there could be a deadrat bounce play - but, so what... they need a double/triple to get even.
As I said earlier - simply watch Offshore dayrates and utilization. Make it real simple - watch DO. DO is a huge laggard here, it will get bought heavy soon because of this factor alone; DO is a much, much better play on Deepwater than FGH ever dreamed of being here, with much, much lower risk and gives you the ability to sleep at night as well.
When DO hits $48+ and when its earning near $3 per share again - then start watching FGH folks - no reason to "slum" untill then...
"It's the Dayrates - Stupid"
DO earned $2.69 in 1998 - when FGH reached its $40 peak, DO is estimated to earn $1.20 in 1999 and only .91 cents in year 2000 - see the "trend" in Deepwater dayrates/earnings anyone ?
To invest in FGH - one only needs to monitor Dayrates as an early indicator for earnings in the offshore drillers. Simply play the drillers in this stage vs FGH, take profits & rotate to FGH when DO starts signaling via its dayrates that it is on track to earn $2+ to $3 again - that is when; FGH will "potentially" start getting a potential stream of new orders - not untill.
If you believe otherwise - you are in a dreamworld. FGH can not & will not return to anywhere near its former valuations untill that scenario in dayrates & earnings plays out for the Deepwater Drillers - they, the Drillers are the present play for deepwater; if you feel that "Deepwater" is the play ( I dont for the record - I prefer E&P's here).
Actually - the "E&P's" are THE play in the Oilpatch right here & now - but, I dont think you guys are ready for that much info in class today - all at one time... that was enough for todays lesson.
Ciao~
PS - I need to take vacations more often; VPI, my newst discovery and my largest holding; up 24% in days, PXD busting out, OEI running strong, and I am loaded to the gills with $8 1/4 XTO - see ya at $12 - that will be a margined "double" in weeks... contrast these plays (posted on Yahoo) with FGH for example...
Read 'em & Weep ... nothings changed - "Chuckies back !" and MEXP aint $4 for Xmas either - is it ?
* fwiw; if you went long when I went long, then went short when I went short - you didnt need $4 MEXP - made more money trading the traders in MEXP than what $4 MEXP would of been... Since I allegedly make the "rules" in MEXP - and the "market" as well (VBG); I officially pardon myself from the $4 MEXP for Xmas boast...
I have spoken; so it is written - so it shall be done...
:) $lider~ |
