Tag Archives: Energy
Posted on 12. Jul, 2012 by Harvey Sax.
Knowing how everything is manipulated, this means Goldman has covered their short on energy and now wants to take money from you the on the other side of the trade. It sure acts like oil has stopped going down for now.
Posted on 22. Feb, 2012 by Wilensky.
While Iran’s willingness to reopen talks with the International Atomic Energy Agency about their nuclear program was a surprise, it seems that the motion was mostly for show. Several rounds of discussions yielded no access to a military site in Parchin which is suspected to be a weapons development facility. There has been no agreement on further discussing the matter. Light crude is hovering close to $106 a barrel today, so much for Prince Alwaleed’s promise to keep oil under the $100 a barrel mark.
“The International Atomic Energy Agency has reported that it held a “disappointing” meeting with Iran this week over the country’s nuclear programme, with no agreement reached on any of the key issues under discussion. After a two-day meeting in Iran, IAEA officials returned to the UN watchdog’s headquarters in Vienna on Wednesday and indicated that talks with Iranian officials had made no progress.”
Posted on 02. Feb, 2012 by Harvey Sax.
The Magellan Fund has never been as strong and consistent a performer after Peter Lynch left the helm. There are many postulates as to why this is the case. I am going to introduce a new one. Few believe Berkshire will be the same after Buffett. In fact those trying to imitate Buffett’s style now have paled in comparison. I believe that just like the two investors shared some things in common, one thing they shared that the market has failed to appreciate is that both investors constantly changed, they evolved and their styles of investing encompassed many and broad asset classes. Buffett has bought everything from blue chip consumer stocks to junk bonds to even writing massive amounts of index puts. Peter Lynch bought it all: slow growers, fast growers, stalwarts, cyclical, asset plays and turnarounds. Even though he owned hundreds of stocks in the Magellan fund, he maintained a plan. Lynch synthesized his years of experience with a set of characteristics of his favorite stock in a chapter called The Perfect Stock, What a Deal!
His checklist sounds as good to me today as when I read it twenty years ago.
- It Sounds Dull- or Even Better, Ridiculous
- It Does Something Dull
- It Does Something Disagreeable
- It’s a Spinoff
- The Institutions Don’t Own it, and the Analysts Don’t Follow it.
- The Rumors Abound: It’s involved with Toxic waste and the Mafia
- There’s Something Depressing about It
- Its Got a Niche
- People Have to Keep Buying It
- It’s a Use of Technology
- The Insiders are Buyers
- The Company is Buying Back Shares
Posted on 24. Jan, 2012 by Harvey Sax.
Here’s The US Energy Outlook From Now Through 2035
Currently, demand for petroleum is higher than other forms of energy, and transportation continues to be the sector that uses the most energy
Posted on 24. Jan, 2012 by Wilensky.
Since mid 2008 natural gas has been completely decimated by the market with the past eight months have been particularly bearish, cutting natural gas stocks in half. Take a look at UNG for instance, down close to 60% from it’s June high of 12.32 a share. So with natural gas bouncing off it’s all time low is it time to take a bullish stance on the commodity? Recent options activity has spiked dramatically, with a call to put ratio of more than six to one. With options activity a good forward looking indicator of investor sentiment, this is generally a very bullish outlook. However, according to Option Monster, the majority of the volume is contained in a single spread by one investor. While all time lows are attractive, tread carefully when chasing another individual’s trade..
“optionMONSTER’s systems show that a trader bought 20,000 March 7 calls for $0.11 and sold the same number of the March 8 calls for $0.03. So the trade cost $0.08, or a total of $160,000. If the UNG is above $8 at expiration, the spread will be worth $1.84 million, but that payout comes with a very small probability. The delta of the March 8 calls suggests that there is only a 7 percent probability that the UNG will be above that price at the expiration. ”
Posted on 01. Jun, 2011 by Insider Monkey.
Insider Monkey follows hedge fund managers because they’re the smartest investors around. They leave less to chance than most investors. They go great lengths to get an “edge” over ordinary investors. Hedge fund managers also have the resources to do extensive research on public companies and they have access to experts who can guide them. We believe we are more likely to beat the market by imitating insiders and hedge funds than trading against them. Based on the transactions of nearly 700 hedge funds compiled by Goldman Sachs, we present the list of top 11 energy stocks that hedge funds are buying like crazy:
1. Williams Co (WMB): Twenty hedge funds had WMB among their top 10 holdings. Hedge funds collectively own 15% of the outstanding shares. The stock returned 25.9% so far this year. Michael Lowenstein’s Kensico, Jeffrey Tannenbaum’s Fir Tree, and Michael Karsch’s Karsch Capital are among the hedge funds with huge WMB positions.
2. BP Plc (BP): Sixteen hedge funds had BP among their top 10 holdings. Hedge funds collectively own 1% of the outstanding shares. The stock gained 5% so far this year. Kenneth Mario Garschina’s Mason Capital, David Einhorn’s Greenlight, and Christian Leone’s Luxor Capital had the largest holdings in BP at the end of March.
3. Marathon Oil (MRO): Sixteen hedge funds had MRO among their top 10 holdings. Hedge funds collectively own 5% of MRO’s outstanding shares. The stock gained 45.6% so far this year. Jeffrey Altman’s Owl Creek, Eric Mindich’s Eton Park and Reid Walker’s WS Capital had large positions in MRO at the end of March.
4. Exxon Mobil (XOM): Sixteen hedge funds had XOM among their top 10 holdings. Hedge funds collectively own 1% of XOM’s outstanding shares. The stock gained 14.2% so far this year. Phill Gross’ Adage and Ken Fisher were among the fund managers who are bullish about XOM.
5. Anadarko Petroleum (APC): Fifteen hedge funds had APC among their top 10 holdings. Hedge funds collectively own 9% of APC’s outstanding shares. The stock returned 3.4% so far this year. John Paulson’s Paulson & Co and Steve Heinz’s Lansdowne Partners had large positions in APC at the end of March.
6. ConocoPhillips (COP): Fourteen hedge funds had COP among their top 10 holdings. Hedge funds collectively own 1% of COP’s outstanding shares. The stock gained 8.6% so far this year. Warren Buffett’s Berkshire, First Eagle and D.E. Shaw had large holdings in COP at the end of March.
7. Chevron (CVX): Fourteen hedge funds had CVX among their top 10 holdings. Hedge funds collectively own 1% of CVX’s outstanding shares. The stock gained 14.8% so far this year. Phill Gross and Cliff Asness had large holdings in CVX at the end of March.
8. Halliburton (HAL): Fourteen hedge funds had HAL among their top 10 holdings. Hedge funds collectively own 4% of HAL’s outstanding shares. The stock gained 23.3% so far this year. Richard Schimel’s Diamondback and Ken Griffin’s Citadel had large holdings in HAL at the end of March.
9. Schlumberger (SLB): Thirteen hedge funds had SLB among their top 10 holdings. Hedge funds collectively own 1% of HAL’s outstanding shares. The stock gained 20.4% so far this year. Jason Capello’s Merchants’ Gate Capital and David Stemerman’s Conatus are among the hedge funds with large SLB positions.
10. Chesapeake (CHK): Twelve hedge funds had CHK among their top 10 holdings. Hedge funds collectively own 5% of CHK’s outstanding shares. The stock gained 20.3% so far this year. Mason Hawkins’ Southeastern Asset Management and Robert Pohly’s Samlyn Capital had large CHK holdings at the end of March.
11. Ensco Plc (ESV): Twelve hedge funds had ESV among their top 10 holdings. Hedge funds collectively own 19% of ESV’s outstanding shares. The stock gained 1.8% so far this year. Robert Rodriguez’s First Pacific Advisors had the largest position in ESV among the 300+ funds we track.
These 11 stocks had an average return of 15% so far in 2011. Investors who want to hedge their risks against rising energy prices should consider investing in these 11 hedge fund favorites.
Posted on 26. May, 2011 by Harvey Sax.
This is a checklist I use to quickly come to a conclusion on a stock. I score a stock, each line getting a 1, 0, or -1. A stock that scored 1 on each line would be a perfect 10. Buy it!
Some of these items are quite subjective. For example how would I score Cash Flow? If a company’s cash flow is much lower than it’s reported earnings, that raises a flag and I would score it a -1. If there are more insiders buying than selling, I would score it a 1. If there are no apparent catalysts in the near future I would score it a 0 but on the other hand if there is a pending secondary that will put more stock out on the market, I would score it -1.
- CHART- know how to read charts. I firmly believe I can improve the price of buying or selling from an understanding of chart action. A good chart gets a 1, a bad one, -1 and inconclusive is 0 RSI is diverging in a bullish chart so I give this a 1
- ANALYSTS- read analyst reports but come to your own conclusions. If the consensus is favorable, 1; if unfavorable -1, and mixed 0. Analysts are generally bearish on this stock with 2 strong buys, 3 buys, 20 holds and 2 sells. You have to understand in Wall Street speak a “hold” is analyst speak for “I wouldn’t buy this now”. -1
- INSIDERS- if the people that know the company the best are not buying it, why should you? This one gets a positive mention since the CEO recently bought 10,000 shares at prices close to where it is trading now. 1
- MANAGEMENT DISCUSSION 10Q AND 10K- this is the only truthful thing you will read about a company. It’s composed by management, the auditors, and the firm’s lawyers. If all three of them can agree on the verbiage, it’s passed a big hurdle. Read it carefully. Pay particular attention to the Risks, Litigation, and Related Transaction sections. These are the things you will wish you had taken the time to read if something goes bad with your investment. The Company has three reportable segments, sub sea and well enhancement, drilling products and services, and marine. The well-known delays in permitting in the Gulf of Mexico have hurt operations ( decline of 47% in the Drilling products and Services Segment) although revenues involved with greater safety procedures have aided that shortfall somewhat. For the most recent quarter ending 3-31-11, revenues increased year over year but income declined. -1
- MARKET DIRECTION- 80% of stocks follow market direction in the short-term. This is your read on the market. Don’t have an opinion, it’s a 0. Market is near term oversold but I’m not decisive here. Give it a 0
- SECTOR OUTLOOK- buying a good stock in a bad sector can be a humbling experience. SPN is a large oil and gas services company. This was one of the strongest sectors of the market this year.but the last three months have not been positive 0
- CASH FLOW- cash flow is more accurate than earnings. Earnings can be more easily manipulated. Cash flow rose in the last quarter and is nearly 10 times earnings. The company depreciates a large amount. This was primarily due to accounts receivable management and income tax payments. The company looks cheap on a multiple of cash flow less than 6x but I believe the depreciation numbers are real and cannot be discounted. I give this a 0
- PEG RATIO- it’s good to find a company growing faster than it’s multiple. Peg Ratio os 1.29. Anything less than 1 is a positive. I give a -1
- VALUATION- contrary to popular opinion, valuation does matter. Use a discounted cash flow analysis. If the stock is trading for substantially less than its DCF, that’s a 1. According to inputs from Valuepro intrinsic stock value is $16.34 where as S&P using two models pegs it between $32 and $40 Give it a -1 as it’s too close to its ISV.
- CATALYST- what’s going to change the status quo? My guess this is the secret to why the CEO recently bought stock on a pullback. There could be a good pipeline of business developing the Gulf both from well remediation intervention and new drilling activities. +1
Conclusion: Superior Energy Services is a global company and will be highly sensitive to the prices of oil and gas. It has three operating divisions; sub sea and well enhancement, drilling products and services, and marine. The well-known delays in permitting in the Gulf of Mexico have hurt operations but they may be coming to an end and could actually be a net positive going forward. The final score is -1. It might be good for a trade (I’m pretty sure it is and I’m taking the money and running but I’m not committing to it. )And I admit I’m obviously missing what the CEO saw when he bought 10,000 shares recently. If the net operating margins return to 17% levels as they did in 2006-08 the stock could be worth closer to $70.
Trading the markets is a humbling experience. I hope this handy checklist makes it less so.
Posted on 09. May, 2011 by George Mobus.
This is the tutorial I presented in Syracuse NY at SUNY-ESF in April. You can download the slides here. The pdf file has much better resolution than you’ll find here. What I will do here is provide some more commentary on the subject with each slide.
And now, a man who needs no introduction…
The purpose of this tutorial was to provide people who were relatively new to the concepts of Biophysical Economics (which is almost everyone!) what the role of net energy is in economic activity. What I present here will be nothing new to long time readers. So you can browse through it quickly. New readers who have not spent any time reading my prior posts about BPE and net energy might find some of this instructive.
This overview slide pretty much sums up what I planned to talk about.
Everyone at the conference was familiar with peak oil and energy return on energy investment (EROI). But the issues of what net energy means to the productive/consumptive economy are much less well understood. In general most people have an intuitive, if not formal understanding of what net energy means. But it is still the case that many people have not really linked up the flow of net energy with the work that gets done in the economy. Hence I choose to focus on Net Energy. The most important points regarding net energy versus gross energy (i.e. the number of barrels of oil per unit time produced) are that: a) net energy available declines at a faster rate than oil production declines; and b) the peak of net energy flow has already passed us by and we are in serious decline already — much before the peak and decline of gross energy.
It is somewhat surprising that many people do realize that net energy available to do useful (read economic) work is less than the gross energy available at the well head, yet they do not really spend much time thinking through how this net energy turns into useful work in economic activity. They have a vague notion of, say, manufacturing production driven by machines and those using up energy. But the nature of the connections and transformations is not as solid.
In this slide I tried to make the connection more solid in people’s minds. Energy in specific forms (e.g. gasoline or electricity) are direct inputs to the machines that accomplish our economic work. Society and the markets may put a value on the end product of work, e.g. doing work to make a hamburger may be just as valued as doing work to make a screwdriver (the tool, not the drink). And they are priced accordingly. But the screwdriver will save energy resources in the future if it is used. Once the hamburger’s calories are used up, that is the end of it. The only possible future economic value in a hamburger might be if it fed a person who used those calories to make a screwdriver!