What are you short?

[Graham Osborn]

My counterpart to the "what are you buying" thread :)

 

I'll start:

ABC

AET

AGN

AMZN (bad idea)

ASH

AZO (bad idea)

BMY

CAR

CBG

CELG

CRM (probably bad idea)

CVS

DISH

ETP

EXR (bad idea)

F

GGP

GRA

GS

KR (probably bad idea)

LB

LNG

M

MA

MCK

MDT

MS

PCLN (bad idea)

RCL

SBGI

SBUX (bad idea)

TSO

URI

 

The ones in parentheses I don't intend to hold much longer.  Common themes in the list are healthcare rollups, levered equipment/ car rentals, banks, brick-and-mortar retail, some levered energy/ MLPs.

 

More ideas appreciated.

 

Good luck,

Graham

[dyow]

The only thing I am considering going short on is anything China.

 

You are short LNG!!!!  I am VERY long LNG.  Good luck though  ;) 

 

Chanos is short too, but when he went public and explained why he was short it made no sense - anyways I always thought the guy was kind of a buffoon (he reminds me of a guy I know who is always the skeptic and sounds smart to people who don't know him but is really full of shit).......sorry to his fans on the board but I don't like the guy.  I think Icahn agrees.   

 

http://www.cnbc.com/id/100727811

 

 

 

[Graham Osborn]

What is the theory behind the Grace (GRA) short?

 

So because I was trying to build myself a less expensive index (major index volatility is way overpriced) my logic for the picks is more macro than fundamental.  That said..

 

I "like" GRA because it's a commodity business with a very high debt load post bankruptcy.  The forward asbestos liabilities are unclear at best.  The company has little revenue/ EBITDA growth to merit any growth premium.  EV/ Rev has grown from 0.15 to 2.25+ over the past 5 years (due to restructuring optimism) even as LT debt has ballooned again to 2B+.  The common has lost 80%+ of its value in the last 2 recessions.  And technically, the common has started to break again.  Tradewise, I don't feel aggressive buying puts 50% OTM (pretty rare) since I expect the stock to lose most of its value over the next few years as the junk and investment ratings reset.

[Picasso]

How do you track so many short positions Graham?  Seems like a lot of work for the potential benefit.

[Graham Osborn]

The only thing I am considering going short on is anything China.

 

You are short LNG!!!!  I am VERY long LNG.  Good luck though  ;) 

 

Chanos is short too, but when he went public and explained why he was short it made no sense - anyways I always thought the guy was kind of a buffoon (he reminds me of a guy I know who is always the skeptic and sounds smart to people who don't know him but is really full of shit).......sorry to his fans on the board but I don't like the guy.  I think Icahn agrees.   

 

http://www.cnbc.com/id/100727811

 

LNG is another bankruptcy play.  Natural gas prices have hammered the stock and as I believe we are in a secular bear market in commodities (as opposed to 2009) I think the more leveraged producers and servicing pipelines will become insolvent over the next few years.  The only reason the company is still around is because of record low interest rates, but CDS has been on the rise for junk bonds.  Over the past few years LT debt has risen by 7x and shares outs by 4-5x.  Tbook has declined by 1B+.

 

I don't pay much attention to what Chanos is doing but when I spontaneously learn he is shorting something I am short I consider it a good sign.  The last time that happened was with VRX.  Given the stock is already off 50%+ though I guess the market has caught on.

 

Good luck,

Graham

[Graham Osborn]

How do you track so many short positions Graham?  Seems like a lot of work for the potential benefit.

 

I am not a good technical trader.  For me risk management for outright shorts is a very real and unacceptable carry cost, not counting the monitoring/ stress involved.  I look for cases where I think the technical picture vindicates what I feel fundamentally, and where the downside is at least 50% (ideally much more).  Then I buy long-dated puts if they are available and the volatility is not too crazy yet.  Then I sit back and forget about them for the most part.  So it is not outright shorting.  Sorry for the confusion.

[dorsiacapital]

This short list is anything but short.

 

Here are some names I'm either short or itching to short at the right price.

 

ATHN

PFPT

MNST

SC (still hasn't filed their 10k, but I'm sure subprime auto is fine)

CAT

DE

Offshore drillers like NE

VRX (much reduced from before, now just using 17/18 otm puts as a bankruptcy play)

INSY

MNKD

MNK/HZNP

DRII

Last legs oil companies (UPL, LINE, EXXI) if the hedging can be worked out

 

I  must say I'm intrigued by your AGN idea b/c of what a hedge fund hotel it has become. If the merger doesn't go through and I don't think it's a sure shot, I'd be very curious about the price action.  The big drops in LNKD and VRX over the last few months show how messy it can be when a HF trade becomes much less appealing. (Basing this on unfounded speculation that there was some margin calling/abrupt selling in both cases). Haven't done a real study of the company though.

 

[dorsiacapital]

The only thing I am considering going short on is anything China.

 

You are short LNG!!!!  I am VERY long LNG.  Good luck though  ;) 

 

Chanos is short too, but when he went public and explained why he was short it made no sense - anyways I always thought the guy was kind of a buffoon (he reminds me of a guy I know who is always the skeptic and sounds smart to people who don't know him but is really full of shit).......sorry to his fans on the board but I don't like the guy.  I think Icahn agrees.   

 

http://www.cnbc.com/id/100727811

 

Sort of funny you say this considering one of the most vocal Chanos bear positions has been on China for the last 5 years.

 

I agree that Chanos hasn't always been successful, running a short only book is just incredibly difficult and probably makes you stretch on deals, but I do think many of his calls (like Enron) have been damn impressive.

 

I haven't done the work on LNG, although so far Chanos results have not been buffoon-ish (published short position in October / price around 47, now around 32).  Don't know your entry point however.

 

If you're looking for a cartoonish short, I think Left may be more promising...

[Graham Osborn]

This short list is anything but short.

 

Here are some names I'm either short or itching to short at the right price.

 

ATHN

PFPT

MNST

SC (still hasn't filed their 10k, but I'm sure subprime auto is fine)

CAT

DE

Offshore drillers like NE

VRX (much reduced from before, now just using 17/18 otm puts as a bankruptcy play)

INSY

MNKD

MNK/HZNP

DRII

Last legs oil companies (UPL, LINE, EXXI) if the hedging can be worked out

 

I  must say I'm intrigued by your AGN idea b/c of what a hedge fund hotel it has become. If the merger doesn't go through and I don't think it's a sure shot, I'd be very curious about the price action.  The big drops in LNKD and VRX over the last few months show how messy it can be when a HF trade becomes much less appealing. (Basing this on unfounded speculation that there was some margin calling/abrupt selling in both cases). Haven't done a real study of the company though.

 

Hi there, thanks for the ideas which I'll look forward to perusing and posting some questions here.  To answer on the second part, for me AGN is a second shot at VRX.  If you look at the the 10Ks they are in many ways mirror images - I actually wrote my short thesis on AGN first since I considered it the more speculative/ levered of the two but on the morning I planned to publish on SA the Teva deal was publicized and I just couldn't bear to wait a month or two for the details to be ironed out.  The organic growth mirage created through acquisitions and price hikes is identical.  The balance sheet is loaded with bogus intangibles at inflated discount rates (as high as 12% for projects that will never see the light of day).  The executive comp for transformative deals is both misaligned and corrupt.  So anyway, when the Teva deal pushback 2/2 unknown regulatory obstacles was announced I went short.  I wouldn't be surprised if good ole Brent Saunders (I call him BS for short) is sitting on a pile of price-hike subpoenas hoping he can salvage both deals and pin up the stock price/ his bonus.  What we have here is a WCOM/ S style regulatory blowup in the works IMO.  PFE/ AGN is contingent on TEVA/ AGN.  So if the latter blows up I could easily see AGN losing 3/4 of its value overnight.  The thing a lot of folks don't understand about VRX was that Philidor was a molehill compared with the debt covenant issue.  If AL had never published his short thesis the same thing would have happened probably within 6 months because of the whole high-yield dislocation precipitated by Glencore and its ilk.  VRX is just one of the early investment-grade casualties as we enter the bust phase of the debt cycle (my early thesis when I identified VRX/ AGN last year was they would be the widowmakers for the investment-grade bond market, but I forgot the sub-60 Brent would put the producers there first).  So AGN's stock price is propped on a pyramid in a deteriorating credit environment.  I bought 2018 220s to be conservative - I think this should also cover the smaller but still significant decline if PFE shareholders wise up to what they are actually buying ;) I didn't think about your point on HFs; hopefully JP learned his lesson in October 2014 and is staying away..

[DCG]

My counterpart to the "what are you buying" thread :)

 

I'll start:

ABC

AET

AGN

AMZN (bad idea)

ASH

AZO (bad idea)

BMY

CAR

CBG

CELG

CRM (probably bad idea)

CVS

DISH

ETP

EXR (bad idea)

F

GGP

GRA

GS

KR (probably bad idea)

LB

LNG

M

MA

MCK

MDT

MS

PCLN (bad idea)

RCL

SBGI

SBUX (bad idea)

TSO

URI

 

The ones in parentheses I don't intend to hold much longer.  Common themes in the list are healthcare rollups, levered equipment/ car rentals, banks, brick-and-mortar retail, some levered energy/ MLPs.

 

More ideas appreciated.

 

Good luck,

Graham

 

You're shorting 33 different companies? Holy crap man. Why not just buy an inverse index fund?

[Graham Osborn]

The carry for an inverse ETF works against you.  It's better to short a levered ETF if you want to go that route.  The levered ETFs don't always have LEAPS, although the regular sector ETFs almost always do.  The problem is that insurance on ETFs (both levered and unlevered) is almost always pricey.  For the levered ETFs obviously they can be quite volatile and that drives the cost up.  But the bigger consideration is these sector ETFs are a popular way for institutions (and many individuals) to play bear sectors when they don't want to drill down to the company level.  I like to think of it as the short equivalent of buying small cap companies (of course the underlying is almost never a small cap).  In exchange for the reduced liquidity and increased work of selection, you get lower premiums and much larger upside if you select the right underlyings.  After the recent rally there are actually a fair number of individual-security options LEAPS selling at a discount to Black-Scholes, which is surprising given you would uniformly expect some residual tail bias in the market.

[TheAiGuy]

My counterpart to the "what are you buying" thread :)

 

I'll start:

ABC

AET

AGN

AMZN (bad idea)

ASH

AZO (bad idea)

BMY

CAR

CBG

CELG

CRM (probably bad idea)

CVS

DISH

ETP

EXR (bad idea)

F

GGP

GRA

GS

KR (probably bad idea)

LB

LNG

M

MA

MCK

MDT

MS

PCLN (bad idea)

RCL

SBGI

SBUX (bad idea)

TSO

URI

 

The ones in parentheses I don't intend to hold much longer.  Common themes in the list are healthcare rollups, levered equipment/ car rentals, banks, brick-and-mortar retail, some levered energy/ MLPs.

 

More ideas appreciated.

 

Good luck,

Graham

 

So, what's the logic behind the MA short?

 

[Graham Osborn]

So, what's the logic behind the MA short?

 

Not my favorite pick in the world, but I think the insurance was just so cheap.  MA is more a bet against the international consumer than a statement on the fundamentals of the business.  Transaction processors are a known casualty of a credit freeze - stock dropped from 30s to low 10s in 2008.  But again, not that spectacular compared with some of the more leveraged plays (i.e. its probably not going to zero).  Still, MA is at historical multiples of tang book and revenue amidst the fintech mania.  The downside this time might be greater.  Due to the possibly extended timetable for a decline, this may not be the best put play.

[Graham Osborn]

This short list is anything but short.

 

Here are some names I'm either short or itching to short at the right price.

 

ATHN

PFPT

MNST

SC (still hasn't filed their 10k, but I'm sure subprime auto is fine)

CAT

DE

Offshore drillers like NE

VRX (much reduced from before, now just using 17/18 otm puts as a bankruptcy play)

INSY

MNKD

MNK/HZNP

DRII

Last legs oil companies (UPL, LINE, EXXI) if the hedging can be worked out

 

I  must say I'm intrigued by your AGN idea b/c of what a hedge fund hotel it has become. If the merger doesn't go through and I don't think it's a sure shot, I'd be very curious about the price action.  The big drops in LNKD and VRX over the last few months show how messy it can be when a HF trade becomes much less appealing. (Basing this on unfounded speculation that there was some margin calling/abrupt selling in both cases). Haven't done a real study of the company though.

 

Hi DC, starting to work my way through your picks:

 

ATHN - well known to me.  I agree their growth in the current markets is not sustainable.  The stock does seem to have topped such that shorting might be reasonably safe.  Currently selling around 40x EBITDA and gradually growing into their multiples.  Have taken on some debt for stupid acquisitions, although I wouldn't go so far as to call them a rollup.  From the standpoint of buying options my concern would be the waffling technical action - seems like the market is waiting for something and I'm not sure I'd feel comfortable setting a price and a time.  Not really a credit-sensitive company but certainly one that should fall with the IYH at some point.

 

PFPT/ MNST/ SC - no opinion since they don't have 2018 options.

 

VRX - congrats as it sounds like maybe you got in early.  At the time I was still practicing conventionally shorting and the stock never made a death cross until it was too late.  If I'd been as comfortable with put options as I am now I might conceivably have made a killing here.  The options are so expensive now I don't dare touch it.  Hard to believe this one practically brought down Pershing and Sequioa - this whole sequence has been kind of surreal for those of us who studied the problems.  As mentioned, I am counting on AGN for a round 2, although the string of planned division sales presents an interesting twist on the Valeant story.

[Graham Osborn]

This short list is anything but short.

 

Here are some names I'm either short or itching to short at the right price.

 

ATHN

PFPT

MNST

SC (still hasn't filed their 10k, but I'm sure subprime auto is fine)

CAT

DE

Offshore drillers like NE

VRX (much reduced from before, now just using 17/18 otm puts as a bankruptcy play)

INSY

MNKD

MNK/HZNP

DRII

Last legs oil companies (UPL, LINE, EXXI) if the hedging can be worked out

 

I  must say I'm intrigued by your AGN idea b/c of what a hedge fund hotel it has become. If the merger doesn't go through and I don't think it's a sure shot, I'd be very curious about the price action.  The big drops in LNKD and VRX over the last few months show how messy it can be when a HF trade becomes much less appealing. (Basing this on unfounded speculation that there was some margin calling/abrupt selling in both cases). Haven't done a real study of the company though.

 

CAT - I really like this pick.  Like CAR, it's a nice play on the proliferation in equipment financing.  LT debt (mostly from the financing arm no doubt, but certainly at least as risky as the megabanks with more energy & commodities exposure) is near all time highs, while revenue is in multiyear declines.  Tangible book declining with it.  Multiple restructurings yet to catalyze a turnaround.  Cheap Chinese competition.  I bought some LEAPS today.  Although Mike Burry loved the stock after the correction in the early 2000s, that was right before the commodities bull market sent the stock through the roof (ironically, that was probably far more important than most of the factors he cited in the article).  The stock has tracked Brent but hasn't plunged its depths of late - good downside potential as the commodities winter deepens.  Stock dropped by almost 2/3 during the last recession when forward prospects were much brighter.  Thanks for the idea.

[Graham Osborn]

This short list is anything but short.

 

Here are some names I'm either short or itching to short at the right price.

 

ATHN

PFPT

MNST

SC (still hasn't filed their 10k, but I'm sure subprime auto is fine)

CAT

DE

Offshore drillers like NE

VRX (much reduced from before, now just using 17/18 otm puts as a bankruptcy play)

INSY

MNKD

MNK/HZNP

DRII

Last legs oil companies (UPL, LINE, EXXI) if the hedging can be worked out

 

I  must say I'm intrigued by your AGN idea b/c of what a hedge fund hotel it has become. If the merger doesn't go through and I don't think it's a sure shot, I'd be very curious about the price action.  The big drops in LNKD and VRX over the last few months show how messy it can be when a HF trade becomes much less appealing. (Basing this on unfounded speculation that there was some margin calling/abrupt selling in both cases). Haven't done a real study of the company though.

 

DE - tempting for the same family of reasons as CAT.  Still considering.

 

INSY - I'm not a big fan of shorting stocks on scientific issues.

 

MNKD - Valeant syndrome.  Volatility already priced into the options so I'll stay away.

[petec]

This short list is anything but short.

 

Here are some names I'm either short or itching to short at the right price.

 

ATHN

PFPT

MNST

SC (still hasn't filed their 10k, but I'm sure subprime auto is fine)

CAT

DE

Offshore drillers like NE

VRX (much reduced from before, now just using 17/18 otm puts as a bankruptcy play)

INSY

MNKD

MNK/HZNP

DRII

Last legs oil companies (UPL, LINE, EXXI) if the hedging can be worked out

 

I  must say I'm intrigued by your AGN idea b/c of what a hedge fund hotel it has become. If the merger doesn't go through and I don't think it's a sure shot, I'd be very curious about the price action.  The big drops in LNKD and VRX over the last few months show how messy it can be when a HF trade becomes much less appealing. (Basing this on unfounded speculation that there was some margin calling/abrupt selling in both cases). Haven't done a real study of the company though.

 

DE - tempting for the same family of reasons as CAT.  Still considering.

 

INSY - I'm not a big fan of shorting stocks on scientific issues.

 

MNKD - Valeant syndrome.  Volatility already priced into the options so I'll stay away.

 

There's a good short writeup of DE in the latest Grant's.

[TontineCapital]

Grant's is also short John Deere (DE). In part for the same reason as CAT, glut of equipment and no demand for new or used equipment. Grant's goes on to say DE will face a swath of credit losses and asset write-downs on its leased machinery if grain prices and agricultural incomes don't increase. 

[Graham Osborn]

Grant's is also short John Deere (DE). In part for the same reason as CAT, glut of equipment and no demand for new or used equipment. Grant's goes on to say DE will face a swath of credit losses and asset write-downs on its leased machinery if grain prices and agricultural incomes don't increase.

 

DE - I like it.  The FCF/ (dividends + buybacks) ratio is unsustainable in the current environment making this a nice play on the bubble in dividend paying stocks.

[frommi]

DE - I like it.  The FCF/ (dividends + buybacks) ratio is unsustainable in the current environment making this a nice play on the bubble in dividend paying stocks.

 

1.) When you buy or sell cyclical stocks based on valuation you will get what you deserve.

2.) There is no bubble in dividend paying stocks. There are cheap dividend paying stocks and expensive ones. Utilities are expensive here, but far from a bubble. (~15-20% overvalued, but given where interest rates are thats fine.) In fact when you think interest rates go up (and inflation, too), why are you shorting businesses that profit from that?

[Libs]

What about CVX ( Chevron) at $95? The market is valuing them as if oil is already at $70.

 

They lost $$ last Q at $42 oil. This Q won't be any good either.

They are borrowing and selling assets to pay the dividend.

LNG prices are depressed; I'm skeptical Gorgon will produce much FCF.

 

Assuming oil between $45- 50 in 2017, and LNG contributes $3B in FCF, they will be close to even operating cash flow; and then have to come up with ~$20B in capex and $8B in dividends.

 

How much can they borrow before their credit rating is impaired? How much sense does it make to borrow to pay the dividend?

 

Seems like $179B is a very bloated valuation for a company with FCF problems like this.

 

I see a variety of EPS projections around $4.20 in 2017. That's assuming $50+ oil, which is no gimme. Even then, with a historical P/E around 10, that would be a $42 stock.

 

Here's the rub though: The dividend, unsustainable as it may be, is $4.28 a year. As long as it stays, that will prop the stock up.

 

What am I missing....

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Graham Osborn]

1.) When you buy or sell cyclical stocks based on valuation you will get what you deserve.

I thought my thesis for the CAT/ DE shorts was pretty darn cyclical.  Commodities bust, too much leverage, at-risk dividend.  If we were sitting here touting low PE- or EV/ EBITDA-multiple cyclical stocks as great investments (or vice versa for shorts), you'd have a point.  No one here mentioned a multiple.

 

2.) There is no bubble in dividend paying stocks. There are cheap dividend paying stocks and expensive ones. Utilities are expensive here, but far from a bubble. (~15-20% overvalued, but given where interest rates are thats fine.) In fact when you think interest rates go up (and inflation, too), why are you shorting businesses that profit from that?

In Ycharts I pull up 746 companies MC > 10B, dividend yield >1%.  Of those, 428 have FCF coverage > 1x.  275 have > 2x.  159 have > 3x.  106 have > 4x.  And that's totally ignoring buybacks which were at record highs since 2007 last year.  So the actual coverage ratios are probably only half that on average.  Good chart for the general trend:

 

https://www.google.com/search?q=stock+buybacks+by+year&rlz=1C9BKJA_enUS633US633&hl=en-US&prmd=nsiv&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjLv6jEhO7LAhXF5CYKHRP4AcYQ_AUICSgD&biw=768&bih=909#hl=en-US&tbm=isch&q=stock+buybacks+by+year&imgrc=pYXmUwsl1iOf0M%3A

 

That is a bubble.

 

The use of interest rates to justify stock prices (dividend or not) is both common and theoretically attractive.  The problem is history doesn't bear it out:

 

https://www.google.com/search?q=pe+s%26p+vs+interest+rates&rlz=1C9BKJA_enUS633US633&hl=en-US&prmd=insv&source=lnms&tbm=isch&sa=X&ved=0ahUKEwig_LDRhe7LAhVDSCYKHe5lAowQ_AUIBygB&biw=768&bih=909#imgrc=cJSgt_CN-5jaNM%3A

 

https://www.google.com/search?q=pe+s%26p+vs+interest+rates&rlz=1C9BKJA_enUS633US633&hl=en-US&prmd=insv&source=lnms&tbm=isch&sa=X&ved=0ahUKEwixuNbGh-7LAhWKOSYKHTNMBxQQ_AUIBygB&biw=768&bih=909#hl=en-US&tbm=isch&q=pe+s%26p+vs+federal+funds+rate&imgrc=FgZoM0btLAcV3M%3A

 

In fact, if you look at the late 1930s (which Dalio/ I think is most analogous to the current phase of the credit cycle), very low interest rates (FFR or LT) corresponded with exceptionally high yields for most stocks, dividend or not.  In fact, the highest equity valuations tend to lag the lowest reference treasury valuations by about 10 years.

 

Happy to discuss further but perhaps best to create a new thread so as not to divert the short thread overmuch..

[dyow]

The only thing I am considering going short on is anything China.

 

You are short LNG!!!!  I am VERY long LNG.  Good luck though  ;) 

 

Chanos is short too, but when he went public and explained why he was short it made no sense - anyways I always thought the guy was kind of a buffoon (he reminds me of a guy I know who is always the skeptic and sounds smart to people who don't know him but is really full of shit).......sorry to his fans on the board but I don't like the guy.  I think Icahn agrees.   

 

http://www.cnbc.com/id/100727811

 

Sort of funny you say this considering one of the most vocal Chanos bear positions has been on China for the last 5 years.

 

I agree that Chanos hasn't always been successful, running a short only book is just incredibly difficult and probably makes you stretch on deals, but I do think many of his calls (like Enron) have been damn impressive.

 

I haven't done the work on LNG, although so far Chanos results have not been buffoon-ish (published short position in October / price around 47, now around 32).  Don't know your entry point however.

 

If you're looking for a cartoonish short, I think Left may be more promising...

 

The china short is more of an insurance play and I never payed much attention to Chanos regarding China. 

 

I think we should probably agree to disagree on Chanos.  He did make money on LNG and the stock can go much lower short term.  But what he said about the company was misleading - I'd go as far as saying it was pure BS - the way i look at it is he made money by misleading other investors.  That said i am not complaining bc that created a buying opportunity and i will buy the stock all the way down from these levels. 

 

Left we can both agree on.

 

 

[Graham Osborn]

What about CVX ( Chevron) at $95? The market is valuing them as if oil is already at $70.

 

They lost $$ last Q at $42 oil. This Q won't be any good either.

They are borrowing and selling assets to pay the dividend.

LNG prices are depressed; I'm skeptical Gorgon will produce much FCF.

 

Assuming oil between $45- 50 in 2017, and LNG contributes $3B in FCF, they will be close to even operating cash flow; and then have to come up with ~$20B in capex and $8B in dividends.

 

How much can they borrow before their credit rating is impaired? How much sense does it make to borrow to pay the dividend?

 

Seems like $179B is a very bloated valuation for a company with FCF problems like this.

 

I see a variety of EPS projections around $4.20 in 2017. That's assuming $50+ oil, which is no gimme. Even then, with a historical P/E around 10, that would be a $42 stock.

 

Here's the rub though: The dividend, unsustainable as it may be, is $4.28 a year. As long as it stays, that will prop the stock up.

 

What am I missing....

 

It doesn't seem like a bad short, although I think there are more interesting options out there.  I wonder how much of their 2P reserves have yet to be written down.  There is certainly a sense that the majors will have the opportunity and balance sheets to buy fire sale assets assuming we are in for a prolonged slump in oil prices.  You are right, I don't think the dividend is sustainable.  I also think the long term business model of the majors may be disfavored by cheaper extraction methods.  But I expect this to be a slow tree to fall relative to the energy industry as a whole due to their diversification between upstream/ midstream/ downstream.

[Picasso]

Nice AGN short Graham.