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

To: Spekulatius who wrote (54800)	1/15/2015 11:46:05 PM
From: Jurgis Bekepuris	Read Replies (2) \| Respond to of 79000

The main point, I did not get over clearly is - are Energy sector companies a good buy, based the information we have now? Tumbling oil prices are a fact and impact the business and the asset values. So are we getting a good deal here? Has the stock market overreacted, or is it slow to adjust. Are we getting a good value here or are we simply betting on a cyclical recovery. I think those are fair questions to ask. Yes, they are. And honestly, I don't know. You are right that the asset values will tumble with the oil price. And, yes, if oil price stays low ($45?), quite a few companies will be either worth less or worthless as you suggested. Even the cash-rich ones might only barely survive, since they have to fund exploration and production drilling. I am clearly betting on somewhat V-shaped recovery with oil at $70 at least within two years or less. If you assume $45 oil for 2+ years, then, yes, almost nothing is worth buying yet. You want some certainty. I guess for certainty you have to wait. I have 2008-2009 comparison here: people who waited - but not too long - got certainty and somewhat good prices still. Personally, I don't know if I would have done better if I waited. I don't think so, because it's hard to me to get into positions fast. But that's just a guess. And the recovery was somewhat V-shaped, so being early was not too painful. I know that today's situation is not exactly the same. Now only oil cos are on sale compared to 2008-2009 when even high quality companies were on sale. Even then I bought oil cos and bank prefs that were not high quality in any way, so I think for me the situation is somewhat comparable. And I was serious that the biggest threat to V-shaped recovery is global recession. If Europe/China go into recession + of course, Russia is kaput + Brazil does not recover + USA tumbles as the last domino.Then, yes, I see oil at $45 or whatever low price for 2 years+. So that's a real risk. If at least USA + either Europe or China do OK, then I doubt we will have $45 oil for 2 years. Anyway, I am talking on rather macro level here and repeating things I have said before. :) I'd like to hear your opinions about concrete companies - cash rich or levered both. My portfolio still is: APA (just a bit), CVX, DNR, DRAGF, GTE, NOV, tiny bit of PGN, SFY bond, PWE, SPND. I am adding mostly to GTE, DNR, a bit of PWE (might not add more - it is risky), a bit of SFY bond. If you have other picks, I'm all ears. I don't think that SLB is cheap enough here. FLR - I am not interested. :) SPND/DRAGF - I got caught with my pants down somewhat. I did not sell when I could have. SPND I don't want to sell, since it's such microcap that it will be hard to get back in. It might tumble on results if any significant holders decide to sell. I'm surprised you managed to sell your position without stock going down much. :) DRAGF is somewhat cheap now, so I don't want to sell either. I am not sure I will add more though. I wonder if DRAGF's majority holder parent will try to takeunder it again. Might happen if downturn is extended.

To: Spekulatius who wrote (54800)	1/15/2015 11:50:58 PM
From: Jurgis Bekepuris	2 Recommendations Recommended By Mattyice Spekulatius Read Replies (2) \| Respond to of 79000

BTW, I wonder if we should short Canadian real estate... Might not be too late yet?

To: Spekulatius who wrote (54800)	1/20/2015 2:29:19 AM
From: Shane M	Read Replies (1) \| Respond to of 79000

Spekulatius, re: oil I was looking at oil/energy (mostly following seeking alpha stories) and posted on the Transocean thread here on SI. (It was the only oil discussion I could find on SI). Below is the post, but in summary, in several historical events it seems that oil stocks often respond in a delayed or confusing way to steep drops in the price of oil. A couple events are shown in table below: Message 29884039 I'm very interested in the energy, but I'm doing my best to be patient based on history. In the current event, the psychology is starting to change, I think, to exhibit a bit more fear - but most of the way down it felt mostly like greed was the dominating emotion. Now greed is beginning to be tempered, imho, to reflect greater possibility of prolonged lower oil price.

To: Spekulatius who wrote (54800)	3/15/2015 5:24:25 PM
From: Spekulatius	1 Recommendation Recommended By MCsweet Read Replies (3) \| Respond to of 79000

So the E&P stocks are pulling back, with the price of crude of course, are any value hunters out there in E&P stocks or related business? I am completely out of the sector now, because I think that many (but not all) E&P's re overvalued based on the current price deck for crude. FWIW, I was a large buyer of TOT, when the stock was at <50$ and crude was 90-100$/brl + but I am not sure TOT is a great value at the same price when crude is below 60$ And earnings are going to be significantly less. Now I understand the concept of buying something when the price is low, especially cyclical stocks, but first the price needs to reflect current fundamentals and I am not sure we are there yet. In any case, the current 10k for E&P companies, should show some of the new realities. We also have seen some capital raises by CVE and ECA already, indicating that some companies are hunkering down for an extended downturn. I am thinking however, that the better bets may be industrial companies that supply the E&P's and can achieve high ROE - companies like NOV, CAM and possibly CBI or FLR. Maybe they're are not cheap enough yet (they will have to deal with a sharply reduced business volume for years, but survival is not nd issue, since they have good balance sheets) but I think more money can be made than with E&P's, which frankly have mostly very poor capital allocation.