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

To: Spekulatius who wrote (56598)	2/25/2016 7:20:00 AM
From: Spekulatius	1 Recommendation Recommended By Shane M Read Replies (2) \| Respond to of 78755

Just wanted to point out some thoughts in the energy sector and E&P's. 1) I don't own any E&P stocks. I think the equity value at current Oil and gas prices is essentially zero and in order to even break even, you need a large rise in energy prices, probably to about $50/brl. This does not mean that the stocks won't rise when crude hit $40, but even at that, most will bleed money. I also think that the recent capital raises by HES and DVN are telling. Both actually have some of the better balance sheet in the industry. The oil majors survive, but it seem that even they can't make money in their upstream business at these prices. 2) I like MLPs. I don't consider them Ponzi schemes, at least not the traditional pipeline MLPs. I never owned E&P MLPs and consider their business model a poor one. While the pipelines are certainly highly leveraged and there are long term effects of their customers suffering, I think the business is durable and throws of storing cash flows. They need access to the capital markets to thrive, but I think they will regain access after the markets calms down and can better estimate the LT impact of the lower energy prices on their business. I own several MLPs. My holding are (WPZ, BWP and EEQ - the latter for IRA's) 3) i own some business that are tied to the energy business - FLR being one example. NOV is a no her good one, although I sold my small position in that one on a recent surge a while ago. While the volumes in their buses so my shrink, at least they are not forced to sell product below cost (like the E&Ps are), so I think getting into these is a better way to invest in a energy rebound.