BP (ADR)

[Myth465]

Myth,

 

Thanks for the Jim Rogers link.

 

I always enjoy listening to him, though he seems to be preaching the same for message for years, that being the devaluation of various fiat currency,+ the depressed value/investment opportunity in commodities. His thesis makes seems to make sense.

 

anyone here making any direct investment in commodities? I have always thought they were high risk + speculative. I prefer the idea of being a buyer of "businesses".

 

I still have a high percent in cash, which helps me sleep well at night, but am worried about the devaluation of cash over time.

 

 

I like Rogers alot. He is straight to the point. You are right, he has been saying the same thing for a number of years, and I agree with his thesis on fiat money. I however havent invested in gold or commodities (outside of oil). I just dont understand them that much and dont feel comfortable with futures. I think Rogers is trying to protect his money, I dont have much and am trying to make some so I prefer stocks.

 

Rogers seems to have a firm understanding of the market and I like to get his input from time to time. Like you I have a decent cash level, about 14% to pickup stocks on those deep down days.

 

---

 

SD I dont follow, what were you getting at. With Statoil.

[tiddman]

From a logical standpoint, I've often favored Natural Gas as an energy source, because it is domestic, onshore, largely hurricane-proof, etc.  However it still fails to be widely adopted in favor of oil.

 

Chesapeake Energy (CHK) has actually started to diversify into oil:

 

http://www.google.com/hostednews/ap/article/ALeqM5iJzKn8AtzYNSdf2IO29O9Z3jKYmwD9G9A5BO0

 

"I think it's going to be an important feature of the company going forward, that we're not so tied to natural gas prices," McClendon said. "Our view is that the world is short oil over the long term, and our country probably has plenty of natural gas."

 

Like so many things with energy sources, it is theoretically possible to use natural gas for everything from generating electricity to powering cars and trucks.  But oil and coal are very hard to displace as energy sources for many reasons.

[Ballinvarosig Investors]

Whitney Tilson is wrong about BP

[roundball100]

Has there been any discussion on this thread of what the impact, if any, there will be on nat. gas companies, as a consequence of the whole BP/gulf situation? 

 

I haven't seen anything, but offshore (and particularly deepwater) natural gas is less and less important with the growth in shale-gas production in the US. At this point even hurricanes that shut down production in the gulf don't have much of an effect on natural gas prices, and Lousiana has become a net importer of gas due to the decline in Gulf production (although the Haynesville shale will change that over time). I'm not sure of the exact number, but I believe Gulf production is 10-15% of total US gas production at this point. Down from 25-30% ten years ago.

 

Sorry for the lack of clarity - I was thinking more about onshore nat. gas.  As noted by tiddman, since "oil and coal are very hard to displace as energy sources for many reasons", it's unreasonable to expect that the gulf disaster will change usage habits.  But for those who want to invest in oil and gas, I guess it more likely that this could cause a movement of investment $, and corresponding valuations, from offshore to onshore (more than from oil to gas companies).

[Myth465]

Whitney Tilson is wrong about BP

 

This is exactly what I think. This is a blue chip knocked down but not a steal given the situation.

 

Also we could have a perfect storm at some point in the gulf. One is forming now and one may hit by August before the well is capped  - http://www.foxnews.com/scitech/2010/06/25/hurricane-season-building-gulf/?test=latestnews

[ragnarisapirate]

hmmmm... an interesting black swan sort of event:

 

http://www.politicsdaily.com/2010/06/21/could-gulf-oil-leak-lead-to-methane-bubble-tsunami-bp-responds/

[Myth465]

Congrats to BP longs today was definitely a good day. Maybe the under promised and overdelivered and this thing is capped.

[valuecfa]

Congrats to BP longs today was definitely a good day. Maybe the under promised and overdelivered and this thing is capped.

 

While the rally has been nice, it is still not a "done deal" in stopping the leak. The integrity of the well is still in question. I think the easy money has been made. While there is still plenty of room for further upside, i don't quite like the risk/reward as much after the 33% rally of the past month. I closed 70% of my position today, and am looking to close the rest in the near future.

[Myth465]

Very smart man. That's exactly what I was thinking.

 

I figure the rally has one more leg and then reality will set back in. They will either announce that they have capped the well, and it would move up, will announce that its stucturally weak and BP will trade back down a bit. 

 

Either way after that, they will have the spill to deal with and the ramifications. Legislation is moving through the House to prevent BP from buying leases for 7 years. It probably wont pass, but people still want blood it seems.

[Cardboard]

Same here. Selling into this rally seems smart IMO. For perspective, BP would be trading around $52 if it had sold off in the same proportion as other large integrateds since April.

 

So the current gap in the share price vs other majors due to the spill is $13 or $40 billion in market cap. How much of that will end up "real" liability? Who knows? But, it sure does not look like a huge buffer as it did when the stock was in the high 20's.

 

Cardboard

[Myth465]

Im kicking myself for not buying leaps on ATPG. That would have worked out well. Now looking at the bonds based on a VIC tip. What do you all think?

[turar]

Klarman initiated a new largish position in BP.