The remarkably talented Janis Ian penned 'Society's Child' in her early teens, complete with a few slick key changes and a defiant closing organ riff. Banned from radio play in much of the country, it nevertheless hit the top of Bay Area charts in 1967. My freshman year at Menlo-Atherton coincided with a district decision to begin busing students in from East Palo Alto. A 'race riot' on campus closed the school for four days!
Asian markets rising an average of +2% in early trading.
Nice to be aware of.
ReplyDeletehttp://www.kesslercompanies.com/content/simple-warning
2nd- Your ability to recall past events with such clarity amazes me.
ReplyDeleteWhich past events?
Deleteget it? get it?
DeleteForgot what I was gonna say....
DeleteBoy Birinyi
ReplyDeletehttp://www.bloomberg.com/news/articles/2016-01-22/birinyi-more-worried-about-markets-now-than-any-time-since-2009
I ventured over to slope of hope for the first time in ages. Talk about bottom ticking the market with this post:
ReplyDeletehttp://slopeofhope.com/2016/01/the-composite-counts.html
Surprised to see the futures not really going up much despite a little rally in oil. It's early but I think we have some more unfinished business to the downside. I still think we see at least 20% down from the top...we need to repeal some or potentially all of the QE3 gains.
ReplyDeleteNow that feels like a bottom in oil. Could be a nice knife catch down there
ReplyDeleteTook off bac and biib. Prob will hold edz
ReplyDeleteWas using edz as a hedge but prob should have just shorted spy. Edz hit hard so far
DeleteJapan's Nikkei +5.88%.
ReplyDeleteEuro Stoxx 50 +3%.
Even Canada's commodity-rich TSX is lifting +1.6% off a 52-wk low set yesterday.
US futures higher between +1.5% to +2%.
But let's not get too excited. Each bounce so far has failed. We need to see sustained buying interest.
'2nd- Your ability to recall past events with such clarity amazes me.'
ReplyDeleteHey, I can recall the exact 'moment' I made the decision to become a pharmacist. I was strolling through the corridors of a campus building in 1980 when I happened upon one of those 'white board' easels announcing an (ongoing) seminar regarding the 'Doctor of Pharmacy' program. I walked in, sat down in the back, and listened to two clinical pharmacists from local hospitals describe their jobs. I liked what I heard. I picked up an app, mailed it in a week later, and in April of '81 was granted admission with the proviso that I complete a second semester of Organic Chem + Lab over the summer.
Best decision I ever made. Technology now makes it possible for many hospital pharmacists to work from home (my retirement plan!). Orders are entered electronically by prescribers (often at home themselves!). Pharmacists review the orders on a PC/tablet, make adjustments and/or interventions (drug selection and/or dosing decisions are now often in the hands of pharmacists) after reading through electronic chart records/notes/labs, and once we complete the verification-> RNs are able to retrieve the meds from automated dispensing cabinets. iPad cameras installed inside IV compounding hoods even allows us to view/sign off on chemotherapy preparations without leaving our PC.
(People always ask whether I considered medical school. I never did. Had I considered it, I would have dismissed it. I'm just not a face-to-face people person. Every time an ambulance delivers another inebriated visitor in the throes of detox I'm thankful not to be the guy who needs to perform a physical exam!)
Just a +17% two-day rally in oil.
ReplyDeleteThe current obsessive correlation between stock indexes and a single independent variable (oil prices) won't last forever.
Nice bounce again this morning. The guys at TD are looking for a bounce and then retest several weeks later like we had in August and in 1998 before the uptrend restarts.
ReplyDeleteBut I wonder if this the "expected" path of the market and we just continue up instead.
Trying to decide if I should add more exposure or just stick what I have, which is quite high exposure.
A more enduring correlation is that between upward trends and positive closes on Fridays. A strong close today will lend credence to a reversal scenario.
ReplyDeleteSPY- Took off one account at +3.75%.
ReplyDeleteENPH- I woke up early to take some more off when I saw it at 2.55 on my phone. If it can recover today I will do so.
ReplyDeleteWLL- I called MOG the other day when this POS was 4.00....now 70% higher.
ReplyDeleteAnd what did MOG say? I've been considering WY down here but knowing MOG likes it gives me the shivers.
DeleteHe thinks the WLL and CLR's of the world will survive, but it could be a long haul. Best of breed in that region is PXD. Recent offering was oversubscribed and well received. Chart obviously reflects that.
DeleteSold TWTR. +4.85%
ReplyDelete"I was a Director of Payroll Services for a Fortune 500 company before I retired in 2007.
ReplyDeleteJust for kicks, I took a look at SLB’s (Schlumberger) career site. It looks like they have 108,000 employees, soon to be 98,000, and they show exactly 21 job openings for experienced workers.
UNP’s (Union Pacific) quarterly results were released today and they were absolutely abysmal. The volume of tangible goods being transported around the country and/or the world is plunging, and it is those tangible goods that create value in the economy.
I think the President’s statement about ‘Anyone claiming that America’s economy is in decline is peddling fiction’ is going to go down as Barack Obama’s biggest lie."
I'm glad I could lighten up profitably the last 2 days. Much more comfortable.
DeleteI would like a big bounce but earnings are not good IMO
ReplyDeleteYep, they aren't so far and the banks lagging sucks.
DeleteBe prepared for spending time near the lows even if we don't go lower
DeleteAt 17-18x what is the most likely earnings per share this year I just am in no rush to buy much especially with earnings falling
DeleteMBUU - I've heard some say they like the new MBUU models but I haven't had a look for myself yet. Do you guys own a boat yet?
ReplyDeleteGPS - Looks like a lot of insider buying?
ReplyDeleteWe may bounce into the high 1900s (make it 1974, my favorite year).
ReplyDeleteWe can count on Hulbert to rain on this parade, however:
Deletehttp://www.marketwatch.com/story/investors-are-still-too-bullish-despite-the-stock-market-correction-2016-01-22
We close red.
DeleteThat's going too far. We close green. The question is how strong a close? If I had to guess, at the highs, and quite strong. A red close on Monday would then make sense.
DeleteI have no idea. Just wanted to take a contrarian look at this
Delete1974 was great. I prefer 1973 though for various reasons b/c 1974 was the beginning of the world going mental, IMO. :)
DeletePSG - How much would you estimate the Bauer hockey equipment name is worth?
ReplyDeleteYRCW - This one at least has participated.
ReplyDeleteNOR is being bankrupted by trapped assets (bauxite mine in Jamaica), looks like the same thing happening to FCX in Indonesia.
ReplyDeleteSmartphone WIFI - Okay so aside from getting cozy with the home thermostat (mine remains OFF BTW, when on I rarely touch the programming) or laser printer what else are you guys using WIFI for these days, anything?
ReplyDeletePlaying music through the stereo from my phone or tablet.
DeleteBut I guess mainly it just is faster and avoid cell data usage.
The internet of things seems to be a ways away still.
This is the purpose I keep coming back to, for listening to music.
DeleteOn the receiving end which device are you using, is WIFI built into your audio system or one of those add-on devices?
Since my purchases of ECA and BTE this week were made with borrowed money, I have to protect the profits I have so far and "not let a profit turn into a loss." Thus, I just placed sell stop orders at today's lows for both of these stocks.
ReplyDeleteThe bounce off Wednesday's lows is pretty substantial already, and even if oil stocks will keep moving higher in the medium term, we can easily have a pullback below yesterday's closing prices. If we do have one, then I'll place a buy stop at yesterday's close, in case oil (and oil stocks) make a higher low on that pullback.
ReplyDeleteBought back into bac today and am eyeing Edc and some sort of oil entry
ReplyDeleteWould you wait for a pullback in oil at this point, Mike, to make your entry?
DeleteI bet it goes straight to $37
DeleteThat's the tof we all know and love!
DeleteKRE - So how about those "cheap" regional banks? If you'd bought this in the last year you're more than likely under water.
ReplyDeleteExcellent Econ reports today. Could very well be a bottom and made me more willing to pick up some positions today just in case. Grabbed bac Edc more mmyt Sam. Debating mtch and tasr as well
ReplyDeleteUsing recent lows as a backstop in these stocks especially bac. The others particularly mtch mmyt and tasr are ones I'm comfortable holding for a while. I snoozed on tasr at $13.7 the other day. At that price it was trading at about 17 times free cash flow and for a company with what I consider to be a pretty wide moat I think that's cheap
DeleteI see, once again, that instead of buying on the way down, it is much better to wait until pros on this blog turn bullish and THEN start buying. This would have saved me from all those purchases of oil stocks I made when oil was at $35...
ReplyDeleteOkay well I remain unconvinced oil lifts much from here but nun-the-less whether right or wrong, I suggest taking a look at MTDR if you insist oil will lift. We should be watching instead, which sectors pull back and which break to the upside.
ReplyDeleteI bet water kicks butt.
MTDR is gonna be a shocker, these guys are in the very best oil spot on the continent (IMO).
Race riot over bussing students from East Palo Alto, 2nd that's a really funny one man... as in cake walk in comparison. I lived in Redondo at the time, no such thing happened there.
ReplyDeleteOh BTW, XYL is a pretty decent water play IMO.
NATI - What these guys are doing is interesting, IMO. They're continuing to cater to development needs.
ReplyDeletePaypal isn't working, must be their solar panels are covered in snow?
ReplyDeleteLook at the price targets on AAPL from all of these analysts:
ReplyDeletehttp://fortune.com/2016/01/22/apple-analysts-report/
If that isn't consensus thinking I don't know what is. We're talking an expectation of an avg of 50% upside for a $600 Billion company
$153.56 is the avg price target
DeleteI was talking to my father in law and he said his business has slowed down significantly. he works with hotels and his business is very tied to the economy.
ReplyDeleteI would not want to be invested in the any companies tied to the US vacation business like hotels with the US dollar where it is. Every Canadian person I've talked to about this is thinking of vacationing outside the US in 2016 with dollar so low. Mexico's Peso is worse, so the hit will be there too. And we saw a 7% increase in American traffic to Canada in 2015 and that is predicted to go higher in 2016, so you are losing that business as well. (between Canada and Mexico, I believe that is around 50% of international tourism to the US)
DeleteTourism is pretty price sensitive I'd think and the USA is not attractive now.
In not too distant future, LaQuinta goes on a tear?
DeleteBB, it wasn't all that long ago you were taking up hotels.
DeleteGreat point about the dollar. So hotels with overseas that are frequented by US travelers might be a great play. Any ideas?
DeleteYeah, I owned the AHT and AHP ones, but sold them. I own one in Canada - HLC.TO
DeleteIt is the cheapest one in Canada (except for a couple really small ones who are likely to go bankrupt), has good management who is working to expose value, a reasonable dividend and they just refurbished 2 of their key hotels. The risk, and why it is cheaper, is they have a fair number of hotels in energy areas. These are somewhat under pressure with occupancy down, but rates holding up. Will be interesting to see how those hotels do in 2016.
I've also looked before for European ones or the Spanish chains that run a lot of the Caribbean hotels, but much of the European industry is small business and not on the stock market, and neither are the Spanish ones.
DeleteThere are some global chains like HOT, but too large for me.
ASR is another one I've considered, but it hasn't gotten cheap enough. They run the Cancun and a few other airports, so seems like a good steady growth area, assuming the drug wars continue to stay away.
DeleteJim Paulsen from wells capital has been money on his calls for a long time. He was cautious last year and kept saying we would see 1800...now that we hit it he thinks it's time to be bullish
ReplyDeletehttp://www.cnbc.com/2016/01/19/jim-paulsen-why-im-more-positive-on-stocks.html
Barron's round table, would read Gundlach and Zulauf.
ReplyDeletehttp://www.barrons.com/articles/barrons-roundtable-part-2-31-savvy-investment-ideas-1453527097
copy this in GOOG:
DeleteAbby Cohen, Felix Zulauf, Mario Gabelli, and Jeffrey Gundlach offer their best bets for 2016 in this week’s Roundtable installment.
you will find a good link.
GM - Speaking of The Moody Blues... Or was that Jackson Browne? Seems, GM is but a shadow of it's former self:
ReplyDeletehttp://qz.com/594984/the-secret-history-of-gms-chinese-bailout/?utm_source=YPL
When a US based company, isn't:
ReplyDeletehttp://www.corporationwiki.com/Illinois/Mount-Prospect/schumacher-electric-corporation-4805061.aspx
If 2011 lows were the bottom of a bear market then Russell 2000 moved 700 pts from low to high. and it just gave back 50% of this move. In 2011 the RUT dropped 32% from top to bottom.
ReplyDeleteI don't follow Fibonacci stuff but I know that Hussman guy always says a bear market gives up at least half of the bull markets gains (not sure how accurate this is). Would be funny if that was all we get and those people expecting half of the gains from the 2009 lows to be reversed miss this fact.
I would use 2009 low of 342.59 and top of 1296 which gets 819 for .50.
DeleteThe levels are:
1070.99
931.79
819.29
706.79
which are potential targets.
.50 from the 2009 low is 948.62, so 958 is a reasonable place to find support or a bounce depending on one's point of view.
DeleteI consider 2011 a bear market. Many of the market indexes were down more than 20% and the S&P was intraday, but not on closing prices. Plus if you recall how it felt, it was much worse than the recent pullback in my opinion.
DeleteThat is one of the reasons I think the current bull market can continue much further. Maybe the current pullback turns into a bear, but still hard to see given economic strength.
The sentiment now is pretty damn bad. I would say it's worse. Problem I have right now is earnings are weakening and it's hard to see how they can just turn around and justify a 18x multiple right now.
DeleteOil does appear to have bottomed so that's a potential positive. I'm contemplating playing that from the long side
Here are the levels off the 2011 low, actually both lows have there place in analysis, no right or wrong.
Delete1132
1031
948
865
Sentiment is bad now, but the market damage seemed worse in 2011 - in my memory, but that may of course not be accurate.
DeleteIn the S&P 500, there are 138 stocks with sub-12 fwd p/e's, and 217 with a sub-15 p/e, so there are some cheap stocks out there. I think you can find good ones.
FWIW, re the global hotel companies, S&P made WYN as a 5-star stock at $81 and it is now $67 and Morningstar has it as a 4-star.
ReplyDeleteRe US hotels, Ashford having a tough time selling some hotels:
Delete"This past quarter, over a very short period of time, the market for large portfolios of select-service assets changed dramatically, resulting in reduced bids that the Company's management and Board of Directors believe does not capture the full portfolio value for shareholders. "
http://seekingalpha.com/pr/15958086-ashford-trust-completes-refinancing-resulting-approximately-81-million-excess-proceeds
And hotelier CHSP has a Q4 miss, but business still looks good for 2016:
Deletehttp://seekingalpha.com/news/3048256-chesapeake-lodging-guides-q4-miss-provides-2016-outlook
Anyone think the homebuilders are worth buying? Residential construction is picking up and they are pretty cheap.
ReplyDeleteMy concern is prices are too high in many locations and foreign buyers have completely dried up. I would stay far away from builders with Texas exposure
DeleteContra the Heard guy on BNN:
ReplyDelete"If you can find value, and there is a lot out there, it could be a good time to buy. Investor psychology is such that the vast majority of people will be running like crazy from the market. There are certainly a lot better sales on now than there have been. If you like a stock, and you are in it for the long-term and not looking to trade, this could be a great time to get in. You will get a higher dividend percentage then you would have a few days ago. "
Summary at http://www.stockchase.com/expert/view/101
Interview at http://www.bnn.ca/Video/player.aspx?vid=787948
JST, that Chinese company that makes electrical equipment which I bought at $3.73 sold today. It had a bid for $4.50, but the final agreement signed at $6.00 this morning. Will help the YTD results, but unfortunately, I kept the position fairly small as I'm still worry about the safety of China investments.
ReplyDeleteTWTR- Thinking of jumping back in here.
ReplyDeleteBAC- Lowest RSI since 8/2011
ReplyDeleteI keep staring at it.
DeleteDB - I've read a few articles about how it's going down the tubes due to derivatives exposure in the energy space. Not sure how true it is.
ReplyDeleteIt's nice to be ahead of the curve on these, hun?
DeleteWas definitely one of my worst ones last year. They are the cheapest of the major Euro-banks so it has priced in a lot of downside, but not going down the tubes. There hasn't been any talk of capital concerns since they did that capital raise, so I think they are OK from that perspective. Watching to see where they go from here - I keep thinking the bad news re lawsuits is all behind them, so they can start focusing on running the business, but stuff keeps popping up. Frustrating.
DeleteWonder how much exposure DB still has to the wave of bankruptcies occurring in Spain?
DeleteTCPTF - This can be anything you want it to, following the bankruptcy.
ReplyDeleteI'm dense and need clarification, These are SPX targets?
ReplyDeleteTelestar3dJanuary 24, 2016 at 4:55 PM
I would use 2009 low of 342.59 and top of 1296 which gets 819 for .50.
The levels are:
1070.99
931.79
819.29
706.79
which are potential targets.
All levels correspond to a Fibonacci retracement level.
Delete1070.99 = 23.6%
931.79 = 38.2%
819.29 = 50.0%
706.79 = 61.8%
They are guides, areas of interest to traders who use Fibonacci, some systems buy all .50% retracemts.
See this book, "The Trading Rule That Can Make You Rich", by Edward D. Dobson. It may be out of print, but key on buying .50 pullbacks.
Above levels are for Russell 2000.
DeleteWhen Expected Default Frequency (EDF) begins soaring, does this suggest big problems are festering? I guess China loves this and would like to scoop up even more invaluable technology at pennies on the dollar thus they have huge incentive for creating a crash.
ReplyDeleteMike, is the current pullback in oil sufficient for you to start buying oil stocks, as you wanted on Friday?
ReplyDeleteConsider this: NDP pays 18% and you have a basket in a distressed sector.
DeleteLook here for holdings:
http://closedendfunds.tortoiseadvisors.com/ndp/portfolio/
Since the purchases of BTE and ECA I made last week were made with borrowed money, I set tight stop orders and they were hit today: at $1.85 for BTE that I purchased at $1.63 and at $3.95 for ECA that I purchased at $3.72. I'll buy back into these stocks if the current pullback is shallow and makes a higher low -- if these stocks rise soon above today's highs.
ReplyDeleteActually, I liked the powerful rally that took place in KMI off last week's lows -- I may buy KMI instead. It is much stronger financially than ECA or BTE. It is still paying dividends!
ReplyDeleteHow is this action positive for jobs? Well, maybe if those jobs "created" represent subprime pay?
ReplyDeleteZINC - Another 36% haircut, shorts continue having a blast. Update, -37%...
More of the same encouraging economic data opaquely referenced in previous posts?
ReplyDelete"Texas factory activity fell sharply in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index—a key measure of state manufacturing conditions—dropped 23 points, from 12.7 to -10.2, suggesting output declined this month after growing throughout fourth quarter 2015."
Really not much of a surprise that Texas is in a recession with what is going on with oil. Economic growth is being passed from energy to the consumer - what you'd expect with the price of oil crashing - - look at things like auto sales, housing and even retail sales are doing pretty good.
DeleteIf you want good reads on economic data, take a look at:
http://www.calculatedriskblog.com/
http://dashofinsight.com/
They are both very good.
David - I'm prob just going to remain conservative and only buy stuff in energy after oil moves above the 200 dma and detests the 200 dma. There's no sign of directional changes moving in the favor of a new bear market, even if it's rates of change getting less bad.
ReplyDeleteI think energy plus China has the potential to psych the market down a good deal more so I'm remaining cautious
I added small pieces to mmyt and tasr today
ReplyDeleteJONE - What a great company and show of strength. Wonder where that idea came from?
ReplyDeleteI got it from the Reminiscences guy who has a great track record. Just goes to show why you should diversify.
DeleteHow well is that diversification working this year?
DeleteHis other Bay Street pick was BXE, which crashed only slightly more today.
DeleteCP,
DeleteHis returns are:
17.4%
99.4%
39.8%
15.2%
-5.0%
So his diversification did work very well, only being down 5% in a very tough year for a guy using obviously pretty aggressive stock picks to have such outstanding returns in previous years. He doesn't only buy energy stocks, but has a diversified portfolio with all industries - see http://reminiscencesofastockblogger.com/portfolio/
I like this article about KMI:
ReplyDeletehttp://www.fool.com/investing/general/2016/01/23/kinder-morgan-incs-founder-lays-out-a-new-strategy.aspx
I am prepared to start scaling into KMI at the current levels, with the current, reduced dividend still amounting to 3.3%. I can borrow money from my credit card at 2%, so this is an easy arbitrage opportunity. :)
Just placed a buy stop order on KMI at $14.45, at the recent intraday high, so as to catch it if its intraday downtrend reverses.
Actually, the NDP closed end fund mentioned by T3D is even more interesting than KMI. It distributed $0.4375 to shareholders in each of the last 4 quarters, adding up to $1.75 per year. At the current price of $8.86, this is 20% of annual yield. Sure compensates for the 2% fee I am paying to my credit card. :) So I just bought some NDP shares and intend to add more on further weakness...
ReplyDeleteI wonder: where does it get the money to make those distributions? Its top 10 holdings are:
DeleteEOG Resources, Inc. EOG 10.2%
Energy Management, L.L.C. EEQ 4.1%
Pioneer Natural Resources Co. PXD 9.0%
Noble Energy, Inc. NBL 3.8%
Anadarko Petroleum Corporation APC 6.2%
Concho Resources Inc. CXO 3.7%
EQT Corporation EQT 5.8%
Devon Energy Corporation DVN 3.7%
Occidental Petroleum Corporation OXY 5.0%
Suncor Energy Inc. SU 3.5%
These are all solid companies, but they are not paying 20% dividend!
That's a great question, I've been wondering likewise about GGN.
DeleteI just looked at their fact sheet and saw that they write 15% out-of-the-money covered calls on approximately 75% of their portfolio, which is a definite source of income for them. I left a message at their investor relations, and when they call me back, I'll find out more.
DeleteAh yes, that makes sense. So if/when on the way up there's a corresponding disadvantage then, right?
DeleteWell, covered calls will limit the upside, but will not limit the income...
DeleteThat must be some panic we are witnessing in the energy sector, if closed end funds are paying 20% yield now! Here is the latest market commentary from NDP:
ReplyDeletehttps://www.youtube.com/watch?v=_OrO07kn4Ic
I only recommend NDP as a LT hold and if you like trade around your core. The fund does use leverage and I do not know how they acquire that yield.
DeleteKMI cost me all my profits from last year as I became enamored with their pipeline network which is one of the best imo, but its my fault as I failed to cut losses. My position in NDP is what was left from KMI and is small, I intend to add but am wounded mentally from the beating in KMI and the sector overall. I also think we are going to see low $20 oil in which case this is still the wrong place to be.
FWIW
I just spoke with an investor rep from NDP and was told that their fund would need to fall 20% from Friday's close of $9.21 before they reach their maximum leverage levels. If their holdings continue to fall after that, they would have to start selling them pretty quickly, and their NAV would start falling precipitously. So this is a very dangerous investment, until we are sure that the bottom in oil is in.
DeleteAnd "The Mist" floats back into town to feast on more capital.
ReplyDeleteBXE - Wow, that was a triple just like the old days.
ReplyDeletePlaced a buy limit order for more NDP at $8.5
ReplyDeleteConsistent with my reply to T3D above, I cancelled my buy limit on NDP at $8.5.
DeleteThere's heavy crude in ND priced at $0
ReplyDeleteSIVB - Fell under $95, looks like China aims to suck the IP life out of silicon valley.
ReplyDeleteFAZ - A 6% gain, ain't banks just grand?
ReplyDeleteSomething whacked biotech stocks today, no incentive to develop them if you cannot recover your outlay?
ReplyDeleteBAC- It's sure trading like something is wrong there.
ReplyDeleteWarriors v. Spurs tonight. Will be rocking.
If I was going to guess, I'd say either:
DeleteMiddle East countries bought the big banks for their leverage to the US and are being forced to sell
or, more likely,
Hedge funds piled into financials last year for the interest rate increase and are now reducing exposure as this seems further out. The reason I think this is the financials moves were fast based on rate moves, indicating quick money is involved in them.
Yeah, certainly not exposure to the oil industry or commodities, whichever comes first.
DeleteEVA is trading like we'll no longer need fossil fuels in the near future.
ReplyDeleteNYC hasn't reached this snowfall since 1869, thus another result of climate change.
ReplyDeleteHoly crap david that's crazy about ndp
ReplyDeleteThis one officially goes on the watch list!!
DeleteMark, what attracts you to NDP? Or are you adding it to your list of potential stocks to short? :)
DeleteLQ - Closed green, hun?
ReplyDeleteBXE - Moody's predicts default:
ReplyDeletehttps://www.moodys.com/research/Moodys-reviews-energy-companies-in-Canada-for-downgrade--PR_342429?WT.mc_id=AM~WWFob29fRmluYW5jZV9TQl9SYXRpbmcgTmV3c19BbGxfRW5n~20160121_PR_342429
Canadian BOE production is near the top of the list of most expensive operating cost in the world.
DeleteDavid I'm trying to think through why ndp would be forced to sell assets if their stock price goes down by 20%. What exactly did the person tell you? Do they have certain covenants regarding the price of the stock?
ReplyDeleteMike, take a look at http://closedendfunds.tortoiseadvisors.com/ndp/asset-leverage/
DeleteIt says: "NDP is required to have asset coverage of at least 300% with respect to senior securities (debt) at the time of a common stock distribution declaration and as of the end of each month."
On 1/22 its asset coverage ratio was 380% => A/D = 3.8. So if instead of A in that equation we use 0.8*A, then we get 0.8*A/D = 0.8*3.8 = 3. So a 20% decline in assets from Friday's close will bring the A/D ratio to the minimum allowed ratio of 3. If assets decline any further, they would have to start selling them and paying down debt.
If you look at historical leverage rates they have been much higher 700%-900%. But the leverage adds extra risk and the sector is getting crushed. I'm sure many people have been hurt trying for the bounce.
Deletehttp://closedendfunds.tortoiseadvisors.com/ratios/?fund=ndp
Bigger scam: peak oil, coal supercycle or China?
ReplyDeleteMan this is unbelievable. I definitely no longer believe a thing coming out of China
ReplyDeletehttp://mobile.reuters.com/article/idUSKCN0V40CR
Placed a buy limit order on KMI at $13 -- gradually scaling into what I think is a pretty solid company that will definitely survive this downturn...
ReplyDeleteFor all you guys trying to catch the bottom in energy, I'd strongly recommend you spread the risk by buying other industries too. Sure, oil could have a big bounce, but it could also be down for years. And all industries, except the safety ones (consumer staple and utilities) are at year lows, so lots of places to get deals.
ReplyDeleteWhat's going on with oil is very political these days and normal business metrics may not apply if Saudi Arabia and Iran get into a price war.
Maybe we are finally getting close to a tradeable bottom. I usually have my trading screen on a one year view. It's now on a 5 year view.
ReplyDeletemb
Do you like how I signed this one? :) Losing my mind.
DeleteThe signature definitely assigned authoritativeness.
DeleteFCX- Looks like no one is buying their bull shit.
ReplyDeleteNDP, decided to sell on the spike 9.29 ish.
ReplyDeleteLooking at alot of oil equities charts and so many no longer have earnings.
Brent I'm actually trying to figure out when to position longer term for those things that benefit from lower oil.
ReplyDeleteI guess pretty much everyone benefits from lower oil, except the producers, so we should see benefits in consumer and industrial stocks.
DeleteConsumers have been paying down debt, but their debt service costs are at decade lows, so at some point, they will want to spend. The improving job market and confidence in the economy would help that. I'd think 2016 will see some of this, but it has been a slow recovery so far, so it may drag out too. Hard to say.
T3d, the historical leverage ratios for NDP indicate the ratio of Assets to Debt, which means higher is better. When the ratio drops below 300%, they will be forced to sell.
ReplyDeleteThey said that long term, they try to maintain debt at 10%-15% of assets, which gives the leverage ratio A/D = 700% to 1000%.
DeleteDavid thanks for the clarification. I sold today.
DeleteWhen I ready may just go with CVX BP and XOM.
KMI, great pipeline assets that will not go away, wish you better luck than I had with it.
Placed a couple lowball offers late today, but the market jumped and they didn't fill. Not sure if I am disappointed or happy about that. Guess I will find out in the morning...
ReplyDeleteI grabbed a little uwti at 1.89. God help me
ReplyDeleteLong spy $189.01 might close by end of ah session
ReplyDeleteSold spy at 189.15 for a few shekels
ReplyDeleteI don't believe this market can withstand a downturn in Apple earnings without dropping more
ReplyDeleteTEX - China buyout offer? You heard it here first!
ReplyDeleteFED on deck tomorrow, suckers rally?
ReplyDeleteIt will be interesting to see how AAPL trades tomorrow. Probably a good tell going forward.
ReplyDeleteWould ideally like to see AAPL pull down the market averages, but have strength under the covers in things like IWM and IWC. Would fit in with my thinking that the market is transitioning to new leaders and sectors in 2016.
Deletecrude oil has been below its 200dma since August 2014. No one knew in September it would get this bad. This is why I like being defensive when the market goes a few % below the 200dma because you never know how bad it will get and you will always have opportunities opportunities if you're wrong and the market rebounds but not if you're long and the market keeps going down
ReplyDeleteHaving said that I haven't seen so many comments about how there's no reason oil will rally since ppl said same about stocks in Feb/mar 09. I was snooping around CNBC.com yesterday and I saw at least 5 articles about how oil is doomed, how it's going to $10 etc etc. it has not paid to be a contrarian in anything for a long time but I think the time is near for oil
DeleteMan all of these energy stocks have horrible balance sheets
DeleteHave a look at MTDR for comparison, I'm curious
DeleteInteresting
ReplyDeletehttp://yragharris.com/2016/01/26/paint/
Sold uwti at 1.93
ReplyDeleteNWLI - Someone painting this tape?
ReplyDelete4.2% unemployment in my state. This doesn't seem to imply an economic problem?
ReplyDeleteNMM - Going up today, pretty good dividend on this one. My basis is $3.12
ReplyDeleteIf we get a bounce from the Fed I would highly recommend getting out.
ReplyDeleteIncluding SPWR? The theme seems to be the end of the age of consumerism in favor of environmentalism?
DeleteCLR/HES strong given what was thought to be weak forward production guidance.
ReplyDeleteMike,
ReplyDeleteThe US energy companies took on a lot of debt this latest cycle. That is why many are predicting bankruptcies.
The Canadian energy companies were more cautious, but many of these also get crushed by low oil for long. They are ones with good balance sheets like XOM, but it hasn't come down that much. A Canadian small cap I own which is pretty good with its debt is SPE.TO, but again, it really hasn't come down that much either.
The ones that have been really hammered mostly have a lot of debt and the question is becoming is the company equity worth anything or do the bondholders end up with it.
But there is a lot of leverage in some of these companies if we get rising oil prices. If you can time the commodity bounce properly, there will be some big winners, but so many smart people have got crushed trying to do this already.
DeleteRemember how TCK rallied in 2009? It rallied because it had a terrible balance sheet, but the bad times did not last for several years, as many had feared. I think the same will be true for oil companies now.
DeleteWY has a pretty good dividend, better than nothing and legging into weakness might be a strategy (although it may have bottomed?) Others CCK/BLL/BERY packagers seems to have bottomed or found support levels?
ReplyDeleteJONE - People, make up ur mind!
ReplyDeleteNDP is a wimpy trading vehicle! Up only 2% now, while BCEI is up almost 20%! But then, KMI is *down* 2% today! I wonder what's wrong with that company... I guess the time to buy it will be when all the "good" trading vehicles have gone bankrupt. :)
ReplyDeleteENSV is kicking butt too.
DeleteDavid,
ReplyDeleteyou have a lot of leverage in these oil companies with bad balance sheets.
Let's say a company is worth $100 million - $90 million in debt and $10 million in equity. If the price of oil goes up such that the value of the company goes up by 30% to $130 million, all of that increase goes to the equity holders, so their investment quadruples to $40 million.
But, of course, if oil drops so the value of the company drops by 10%, you are wiped out. That's why you see outsized moves like we had in TCK with these commodity stocks.
BIIB, trying to buy this at 273 and 271 but holds the 274.
ReplyDeleteHad three good trades in it earlier today, earnings is the catalyst, just do not know if it follows thru tomorrow.
"Value investors must be strong and resilient, as well as independent-minded and sometimes contrary. You don't become a value investor for the group hugs. Indeed, one can go long stretches of time with no positive reinforcement whatsoever. Unlike some other fields of endeavor, in investing you can do the same thing as yesterday but achieve completely different reported results. In the long run, the research and analysis you perform should overcome market forces; the fundamentals ultimately matter. But in the short run, markets can trump effort and insight." -- Seth Klarman 2015 year-end letter to investors.
ReplyDeletehttp://www.valuewalk.com/2016/01/seth-klarman-2015-letter/
Seems to be BB's sentiment.
Good take.
DeleteWorks for me. Sometimes it takes a lot longer than you think and sometimes you are are wrong, but on average you do well buying undervalued businesses and waiting.
DeleteAnd I do think we are setting up for a period of value outperformance, so I'm pretty excited about the next couple years.
The trading in KMI sucks. It sure seems like it wants to retest last week's lows. So I lowered my buy limit order on it from $13 to $12. That will make me a little more of a value investor than before. :)
ReplyDeleteBAC green.
ReplyDeleteGDX has sure did a number last week, breaking below the support it had established over the past 6 months and then rallying right back up...
ReplyDeleteBought EVTC - they do credit card and banks card processing in the Caribbean. They sign up merchants and have a network for inter-financial payments. Based in Puerto Rico, so probably beaten down recently due to the poor markets and negative sentiment around Puerto Rico. High margins and a good lock on their business. Would not be surprised to see them bought out. Their balance sheet is a bit messed up because they were spun out of a bank a few years ago, so they have a lot of things on their that need to be depreciated making their earnings look worse than they really are. They are trading about half the value of similar US companies. Not going too big into it, but think it is a good risk/reward.
ReplyDeleteSchafer's pick, I have it on my watchlist, good luck.
DeleteBB- Where did you get this idea?
DeleteTCK- Wow, I can't believe this has come full circle.
ReplyDeleteThat's right! Its monthly low in 2009 was $3.45. It closed at $3.46 today. Apparently, it did not take care of its debt, when it had a chance. I am sure FCX will also shock investors with its rally, once the commodity downturn is over...
DeleteOil and gas only account for 30% of distressed debt issues in January.
ReplyDeleteNo one wants to buy their debt anymore...
Delete