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

To: Fredman who wrote (592)	11/23/1998 10:21:00 AM
From: Robert Douglas	Read Replies (1) \| Respond to of 4691

Gee, i wonder if WEB would be the slightest bit interested in SLB ? I know probably not because he cannot predict growth rate (because he cannot predict Oil futures), but it is THE leader in the industry, no question about it. I don't know if Buffett is interested in Schlumberger but I sure am, having recently picked up a position in the stock. As you state, it is clearly the leader in its business, in fact, in many ways it is the oil field service business. Is this a difficult concept to understand? Will the world we know always need to drill for oil and maintain producing wells? I believe so. Certainly if Buffett can buy MCD because of the worldwide "demand for fat", he recognizes the worldwide demand for energy. As you state, predicting the future of oil prices will certainly determine the short term performance of the stock. This however is a distraction from the true value of the business which I would love to see debated on this board. I for one think the stock isn't "50-cents-on-the-dollar cheap" but have been willing to pay a good price for what I consider to be a great business. -Robert

To: Fredman who wrote (592)	11/23/1998 6:11:00 PM
From: Shane M	Read Replies (1) \| Respond to of 4691

Fred, I fired up the stock database to take a look at SLB, expecting to figure out why it's not a stock I should be interested in. It simply hadn't been showing up on any of my screens, but "low and behold" the financial characteristics are in the ballpark of what I like to see, except free cashflow was slightly negative. Was especially suprised to see the fat consistent margins despite the business they're in. It doesn't look as cyclical as I would've expected. Perhaps this is an example of one of Peter Lynch's growing companies in a mature industry. The question I guess becomes how much should be paid for this co? and does it have a sustainable competitve advantage/barrier to competition? I can't answer these without looking further. Shane