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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (38240)	6/9/2010 3:46:15 PM
From: Paul Senior	Respond to of 79085

These big integrated oils seem to move together with the price of oil. If BP does eliminate the dividend, then I say why not just buy one of the others that pays a dividend vs. BP. And if BP is in litigation for years and which, if it were like the cigarette companies, the stock might fluctuate on litigation rumors, progress, outcomes, appeals, etc. So in addition to oil price volatility, there's another added layer of volatility and/or risk for BP. Maybe a case can be made for a paired trade--- buying XOM or Shell or Total or Oxy or something, and shorting BP.

To: E_K_S who wrote (38240)	6/9/2010 3:58:14 PM
From: Steve Felix	Respond to of 79085

This seemed to get it started this morning: Analyst sees BP dividend cut as 50% likely 7:57a ET June 9, 2010 (MarketWatch) NEW YORK (MarketWatch) -- Societe Generale analysts Evgeny Solovyov and Aymeric de-Villaret said in a note to clients on Wednesday they see a 50% probability that BP Plc will skip its upcoming quarterly dividend, which will be the subject of a directors meeting by the embattled oil giant on July 27. "This is no longer a question of the strength of its balance sheet (which we think is strong enough) but of whether BP will be able to take the situation under sufficient control by the time it has to decide on the dividend...to come up with a story palatable for U.S. politicians and public opinion," the analysts said. "BP has been recovering an average of 11,000 barrels a day in the past few days and it expects to increase the rate further. There is a reasonable chance therefore the mood will change by late July." I don't pretend to know if they will cut or not. Maybe the safest play would be to buy IF they cut, thinking that they bowed to pressure and will hike it back up when the heat dies down. A 50% cut would give a 5.6+ yield, on todays close, to watch it play out.