FCX, yeah I own some of that. Ouch. On the surface I really don't like this deal. Great for Plains though. I just owned the wrong stock. I think PXP made a great deal.
Here's to luck, MMR, finally got one and sold to you. I actually bought the first down day too early at 10.49.
I never believed and still do not believe its a dry hole, just a very techinical drilling procedure so deep in the earth frought with many problems. FCX will be on my list to buy but using the three day rule on dump downs like I should have on MMR.
INTC, I guess its just some short covering on the news yesterday, most likely will build a position and use as a cash proxy. I not sure my DNA can handle it will see.
Tonight is "Nadurra" time and "Lucy Strikes" of the sixties era.
It looks to me like the market is trying to deal with the fact that the best days for AAPL's growth may be behind it. I wouldn't read into the action too much. Why not get into a company with a ton of growth ahead of it, like Zillow? I never understood people's infatuation with investing in something that is up 100 fold in 10 years.
I've never seen a made up story the press failed to blow into Armageddon for ratings. I just wish I had a copyright on 'fiscal cliff'. All I ask is for a nickel each time it's used by anyone. I'd have retired by now. How can anyone take the press seriously anymore?
WLL is a low risk trade here the .5 fib is 42.50 it closed yesterday at 42.52 its trading at 43.97. This is off a quarterly chart low of 2009 to high of 2011.
GMO - Looks like since permitting is complete than POSCO will be sending funding their way in the near future. Will this give GMO reason to rally at least briefly?
Reopening RYPMX at the close. The top nine holdings of the fund are selling off hard today. Its top holding, FCX (at 10% of the fund), is selling off -16% on news of its acquisition of two oil and gas companies. I last closed a one-day trade in RYPMX November 29 @ 63.60.
NSPH that guy Slezeak or whatever his name is is not buying for himself he represents a fund which is what he bought for. A little different then buying for yourself.
They say you can't lose taking profits..whoever THEY are. THEY are full of $hit. If I had held just this one trade it would have made my year all by itself.
2nd - I'd recommend getting into Z. It's an excellent long term play. Check out these article for starters: http://wallstreetpit.com/97707-paa-research-defend-zillow-z-following-recent-decline-in-stock/ http://thebasispoint.com/2012/11/07/ignore-zillow-at-your-own-risk/
i got an email yesterday i think from Elder's website and it sounds like they are bearish overall on the market from a technical perspective. SO they agree with Landry at the moment.
MMR/FCX...How does this exactly work and is it 'legal' in the loose sense. I wonder if PXP was thrown in there only to make it smell better. Man, what a day. MITK/PXP/MMR...all co. I've held large positions in go bat shit, and NSPH struggles again.
I'd consider it if he'd paid himself 8 bucks for MMR. PXP was reasonable, and am honestly surprised that PXP took it...but was also surprised at the low premium BEXP took. Maybe it's just the industry.
I think it is tough to sell an energy company these days and you aren't getting much premium for it.
The question I have is why is FCX, the biggest Copper / Gold miner in the US, moving into oil. I would assume they must have extra cash and not see enough growth in their current assets, but with the prices of all the other metals stocks down, it would have made sense to pick up a mid-sized miner on the cheap to grow their business. To me, this kind of implies that they don't see good demand for metals or the ability in the current cost environment to make reasonable profits. Maybe I'm missing something or maybe they just wanted a hedge against energy costs (as they are a huge part of mining and BHP has done the same), but overall, I'd say this is a negative for metals stocks.
Yes, and I believe MMR was a spinoff from FCX way back.
Still, if you are running FCX, your fiduciary duty is to the shareholders of FCX, so the purchase should be evaluated solely on whether it is in the best interests of FCX. I don't know much about Moffett, so perhaps he's willing to overlook things like this.
Seems to be a lot of pushback in the press this morning - will be interesting to see where this goes.
FCX diversifies into energy Freeport-McMoRan announces ~US$20B in total energy acquisitions FCX has entered into merger agreements with both Plains (PXP) and McMoRan Exploration (MMR). Under the terms of the deal, FCX will acquire PXP in a stock and cash deal, paying $3.4B in cash and issuing 91M shares. FCX will also acquire MMR for cash of $14.75/share plus 1.15 Ultra-Deep Royalty Trust units per MMR share. Including assumed debt, the transaction values are estimated at $17.2B for PXP and $2.4B for MMR net of PXP’s and FCX’s pre-existing interest. FCX projects oil & gas to be self funding; near-term growth projected Assuming $100/barrel for Brent crude and $4.50/mmbtu for natural gas contracts, FCX estimates 2013 pro forma oil & gas EBITDA at ~$3.1B (26% of total estimate of ~$12B). Of note, FCX expects the incremental $2.5B, $2.9B and $3.3B in related oil & gas capex for 2013/2014/2015 to be self funding. 2013 annual production is expected to be 64mmboe, with near-term growth projected. Near-term sentiment on acquisition negative Despite the transaction being accretive, reducing political risk and hedges protecting cash flows, we believe negative near-term investor sentiment may weigh on the shares given diversification/dilution of the copper growth story and material overlapping directorships/management between FCX, PXP and MMR. Valuation: price target lowered to $40 from $47; Buy rating maintained Our revised $40 PT is based on a 60/40 weighting applied to our 5.00x (down from 5.75x to reflect near-term negative investor sentiment and lower energy multiples) NTM EV/EBITDA and 1.0x P/NAV valuations. Given the implied return, the shares are rated Buy.
Impact Negative. The move comes as both surprising and disappointing to the market and resulted in a ~15% drop in the share price yesterday. FCX’s diversification into oil and gas arguably removes a key investment draw of the company in its copper exposure. After the deal, pro-forma net debt is expected to increase to US$16B, from net cash of US$0.2B in Q3/12, reducing or eliminating the likelihood of any increase in cash returns to shareholders. The purchase suggests management sees a lack of attractive growth opportunities within the copper sector. Most perturbing, in our view, is the lack of opportunity for shareholders to vote on a transaction that is two-thirds the market cap of FCX, especially given management's financial interest in one of the targets. Forecasts BMO Research has not adjusted its base case FCX forecasts as yet. Valuation BMO Research’s estimate of FCX’s NPV at US$48.34/share is unchanged subject to combing the three companies. Recommendation Shareholders may seek to lobby the board for a vote on this transaction, or if not listened to, possibly remove the board. The bids may well be accretive, but recent history suggests otherwise, and FCX does not have the management to assess petroleum ventures. On possible diminished shareholder returns, unwanted diversification and self-inflicted loss of trust, BMO Research downgrades FCX to Market Perform with a reduced price target of US$30, or 0.6x NPV.
I agree with the comments below. And who benefits? I can't finish the article but my spidy sense are tingling after seeing ur comment here ==> "and material overlapping directorships/management between FCX, PXP and MMR."
I forgot which article I got the comments below from but I agree with Hambro's comments
Hambro Comments
The strategic justification for the two deals was questioned by BlackRock Inc., which has an 8 percent stake in Freeport, according to a February filing. Evy Hambro, manager of BlackRock’s $12 billion World Mining Fund, said on the conference call that Freeport investors should be allowed to vote on the deal. The Freeport stock used as payment isn’t sufficient to require a vote by shareholders, according to the mining company.
“Congratulations on making one of the worst teleconferences I’ve ever heard to justify a deal,” Hambro told Adkerson. “I haven’t heard anything on this call that in any way justifies why these companies should be put together.”
Investors have the freedom to diversify their own portfolios “and don’t need management teams to do it for them,” Hambro said.
“I hope you’re not going to be jumping to conclusions too quick and look at the history of why we’ve been successful in the past,” Jim Bob Moffett, Freeport’s chairman and also McMoRan’s co-chairman and CEO, said on the call in response to Hambro’s comments.
They're pretty fast when it comes to making power line repairs, aren't they?
ReplyDeleteWe get more than the average power problems....trees you know....but they get a lot of practice so around here the repairs happen pretty quickly.
DeleteAnyone trading FCX after a 13% hit?
YRCW doing what YRCW does...
MMR is up um, nearly 80%!
DeleteOkay, put the sharp stick down now....
DeleteYeah, no kidding! Hadn't considered someone would come along to throw money at the problem, someone with the same name no less.
DeleteC - Lay off of 11,000 employees produces a stick save for XLF
ReplyDeleteWeird action. AAPL and miners selling off, BAC spiking up.
ReplyDeleteSeems like miners always get hit when BAC rallys.
DeleteNLY - When does the ex-div rally begin, will there be one?
ReplyDeleteNLY - In @ $14.35, took a while for the order to hit as the waiting line was long.
ReplyDeleteWish me luck!
FCX, yeah I own some of that. Ouch. On the surface I really don't like this deal. Great for Plains though. I just owned the wrong stock. I think PXP made a great deal.
ReplyDeletePXP - Wishing I owned this one.
DeleteNSPH - We're not exactly riding this one up today, are we?
ReplyDeleteHere's to luck, MMR, finally got one and sold to you. I actually bought the first down day too early at 10.49.
ReplyDeleteI never believed and still do not believe its a dry hole, just a very techinical drilling procedure so deep in the earth frought with many problems. FCX will be on my list to buy but using the three day rule on dump downs like I should have on MMR.
INTC, I guess its just some short covering on the news yesterday, most likely will build a position and use as a cash proxy. I not sure my DNA can handle it will see.
Tonight is "Nadurra" time and "Lucy Strikes" of the sixties era.
China was up last night. PTR is a good proxy.
ReplyDeleteLong
It looks to me like the market is trying to deal with the fact that the best days for AAPL's growth may be behind it. I wouldn't read into the action too much. Why not get into a company with a ton of growth ahead of it, like Zillow? I never understood people's infatuation with investing in something that is up 100 fold in 10 years.
ReplyDeleteDitto. I do wish I had held the shares I bought at $80 though....
DeleteOr $7 back in 2000.
DeleteI do hope to at some point put some Zillow under my pillow.
DeleteI think FCX bounces back to 35-36 before long.
ReplyDeleteChina officially broke out yesterday:
ReplyDeletehttp://www.google.com/finance?q=INDEXHANGSENG:HSI&ei=1oC_UODEMorliAL9_AE
Look at India:
http://www.google.com/finance?q=INDEXBOM%3ASENSEX&ei=1oC_UODEMorliAL9_AE
Japan looks excellent:
http://www.google.com/finance?q=INDEXNIKKEI%3ANI225&ei=EIG_UIDHEqSfiALcbw
Italy - lookin good:
http://www.bloomberg.com/quote/FTSEMIB:IND
Spain - ditto:
http://www.bloomberg.com/quote/MADX:IND
Greece - how bout it!:
http://www.bloomberg.com/quote/ASE:IND
What's all the fuss about? A stupid fiscal cliff that ALWAYS gets pushed out into the future? Give me a break.
(Having said that, I do see a nice little pullback in Jan/Feb)
Fiscal cliff?
DeleteDebt ceiling?
Y2K?
Bird Flu?
Swine Flu?
Job creators?
I've never seen a made up story the press failed to blow into Armageddon for ratings.
I just wish I had a copyright on 'fiscal cliff'. All I ask is for a nickel each time it's used by anyone. I'd have retired by now. How can anyone take the press seriously anymore?
Dont forget...we only have 16 days left until the world ends.
Delete"16 days left until the world ends."
DeleteOh man, not again!!! So much for global warming..... ;)
That's the day they nuke IRAN.
DeleteCC - You might patent "Fwiscal Cwiff" instead, could receive even more revenue.
DeleteThis comment has been removed by the author.
ReplyDeleteGold - Has gold caught the flu or what? Woulda' expected miners to be filling their diapers on the break down through $1700
ReplyDeleteWhat's propping up the DJIA?
ReplyDeleteAGO - Tick/tock... Okay, so when do the slobberhounds who control this thing for no good reason take this one clear back down to the lower trend line?
ReplyDelete$XEU - Euro triple top? Is gold actually warning against chasing US stocks today and pulling back a nub tomorrow?
ReplyDeleteNSPH- Link to the yahoo message board. A wrap up of yesterday's presentation. Looks like the market is calling bullshit though.
ReplyDeletee.yahoo.com/mbview/threadview/;_ylt=AmIDQdiUmr0qUSFIp_01vcjeAohG;_ylu=X3oDMTFqNXBlMjRpBG1pdANNZXNzYWdlIEJvYXJkcyB3aWRnZXQEcG9zAzEwBHNlYwNNZWRpYU1zZ0JvYXJkcw--;_ylg=X3oDMTFlamZvM2ZlBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdAMEcHQDc2VjdGlvbnM-;_ylv=3?&bn=33ead3e3-35e9-3042-baf6-cda0b1458ff8&tid=1354653338487-9bca9a38-f171-4551-a19e-3f86df6628c2&tls=la%2Cd%2C2
This works...
ReplyDeletehttp://finance.yahoo.com/mbview/threadview/?&bn=33ead3e3-35e9-3042-baf6-cda0b1458ff8&tid=1354653338487-9bca9a38-f171-4551-a19e-3f86df6628c2&tls=la%2Cd%2C2
coals and energy rockin
ReplyDeleteKOG very interesting here
MITK?
ReplyDeleteWhat do you bet the 'deal' with USB is more of a give a way?
Deletedon't know!
DeleteWLL is a low risk trade here the .5 fib is 42.50 it closed yesterday at 42.52 its trading at 43.97. This is off a quarterly chart low of 2009 to high of 2011.
I'm not quite feeling the bullish case here.
ReplyDeleteRearrange a few letters and you probably have it nailed, LOL!
DeleteSeems 1413 is the knee-point, if the euro is topping then does that bring some relief to the eurozone?
DeleteUNG - Headed to $30?
ReplyDeleteGMO - Looks like since permitting is complete than POSCO will be sending funding their way in the near future. Will this give GMO reason to rally at least briefly?
ReplyDeletethen, as in if then...
DeletePKX - Speaking of POSCO, boy that KOSPI sure has performed... Does this mean South Korea is anticipating a Chinese economic recovery?
DeleteReopening RYPMX at the close. The top nine holdings of the fund are selling off hard today. Its top holding, FCX (at 10% of the fund), is selling off -16% on news of its acquisition of two oil and gas companies. I last closed a one-day trade in RYPMX November 29 @ 63.60.
ReplyDeleteGotta be tough to trade like this - gotta give you credit that you are able to do as well as you are.
DeleteNot as hard as holding onto a large position in NSPH!
DeleteThank you, and agreed!
DeleteNSPH that guy Slezeak or whatever his name is is not buying for himself he represents a fund which is what he bought for. A little different then buying for yourself.
DeleteFWIW
Bullish markets for the foreseeable future (next 10 minutes at least!).
ReplyDeleteMMR> Just ----ing unbelievable.
ReplyDeleteI've been saying that all day.....
DeleteThey say you can't lose taking profits..whoever THEY are. THEY are full of $hit.
If I had held just this one trade it would have made my year all by itself.
Back to self flaggelation....
3 day rule would've worked out great, too.
DeleteAlmost no one had any idea it was going to be bought out, especially people like us.
DeleteTotal Luck! just think of the poor souls who sold all their shares on the bad news the other day just to see this.
If you ask me the mkt has been brutal in shaking people out at a loos only to rebound shortly there after ie ARR and its ilk.
ACI looks like it coming out of a higher low to me.
ReplyDeleteFCX, if I had wanted oil and gas I would have bot it myself. I'm gonna fire somebody for this.
They're gambling with shareholder money.
Delete2nd - I'd recommend getting into Z. It's an excellent long term play. Check out these article for starters:
ReplyDeletehttp://wallstreetpit.com/97707-paa-research-defend-zillow-z-following-recent-decline-in-stock/
http://thebasispoint.com/2012/11/07/ignore-zillow-at-your-own-risk/
okay long Z at 26.41
Deleteand AREX at 23.01 similiar to WLL but not quite if mkt weakens will hedge out with SP500 and hold on till mkt turns.
sold 2 of my 5 jan 27 fslr calls at 4.15 to lock in some profits, will keep a mental stop in place at cost on the rest
ReplyDeletei got an email yesterday i think from Elder's website and it sounds like they are bearish overall on the market from a technical perspective. SO they agree with Landry at the moment.
ReplyDeleteNLS oh my!
ReplyDeleteWFR is a VERY strong buy in my opinion. But what the eff do I know!?
ReplyDeleteMMR/FCX...How does this exactly work and is it 'legal' in the loose sense. I wonder if PXP was thrown in there only to make it smell better. Man, what a day. MITK/PXP/MMR...all co. I've held large positions in go bat shit, and NSPH struggles again.
ReplyDeleteThose are the days that make your really appreciate the good ones!
DeleteThe reason is primarily b/c I own NSPH.
DeleteRYPMX closes down -2.36 (-3.81%) to 59.58.
ReplyDeleteMr. Burns explaions the fiscal cliff.
ReplyDeletehttps://www.youtube.com/watch?v=c91usT4P1u0&feature=player_embedded
DVN - Is this one MOG approved?
ReplyDeleteSome others: PBR/SM/BAS/FST
DVN- Yes, he likes it...but it's highly weighted towards gas.
DeleteFCX - I guess we have to buy this one.
ReplyDeleteI'd consider it if he'd paid himself 8 bucks for MMR. PXP was reasonable, and am honestly surprised that PXP took it...but was also surprised at the low premium BEXP took. Maybe it's just the industry.
DeleteEveryone loves a great water park.
DeleteI think it is tough to sell an energy company these days and you aren't getting much premium for it.
DeleteThe question I have is why is FCX, the biggest Copper / Gold miner in the US, moving into oil. I would assume they must have extra cash and not see enough growth in their current assets, but with the prices of all the other metals stocks down, it would have made sense to pick up a mid-sized miner on the cheap to grow their business. To me, this kind of implies that they don't see good demand for metals or the ability in the current cost environment to make reasonable profits. Maybe I'm missing something or maybe they just wanted a hedge against energy costs (as they are a huge part of mining and BHP has done the same), but overall, I'd say this is a negative for metals stocks.
BB- You do realize Moffett is the Chairman of both MMR and FCX, right?
DeleteYes, and I believe MMR was a spinoff from FCX way back.
DeleteStill, if you are running FCX, your fiduciary duty is to the shareholders of FCX, so the purchase should be evaluated solely on whether it is in the best interests of FCX. I don't know much about Moffett, so perhaps he's willing to overlook things like this.
Seems to be a lot of pushback in the press this morning - will be interesting to see where this goes.
Good insight there, BB.
DeleteIn case you wanted to know.
ReplyDeleteTake a tour of one of Breitling’s drill sites as we show you step by step how we drill a horizontal natural gas well.
http://www.breitlingoilandgas.com/invest-in-the-bakken-shale/?gclid=CJ3X2ImVhbQCFYp_QgodIHEA6Q
FCX diversifies into energy
ReplyDelete Freeport-McMoRan announces ~US$20B in total energy acquisitions FCX has entered into merger agreements with both Plains (PXP) and
McMoRan Exploration (MMR). Under the terms of the deal, FCX will acquire PXP in a stock and cash deal, paying $3.4B in cash and issuing 91M
shares. FCX will also acquire MMR for cash of $14.75/share plus 1.15 Ultra-Deep Royalty Trust units per MMR share. Including assumed debt, the
transaction values are estimated at $17.2B for PXP and $2.4B for MMR net of PXP’s and FCX’s pre-existing interest.
FCX projects oil & gas to be self funding; near-term growth projected Assuming $100/barrel for Brent crude and $4.50/mmbtu for natural gas
contracts, FCX estimates 2013 pro forma oil & gas EBITDA at ~$3.1B (26% of total estimate of ~$12B). Of note, FCX expects the incremental $2.5B,
$2.9B and $3.3B in related oil & gas capex for 2013/2014/2015 to be self funding. 2013 annual production is expected to be 64mmboe, with near-term
growth projected.
Near-term sentiment on acquisition negative Despite the transaction being accretive, reducing political risk and hedges protecting cash flows, we
believe negative near-term investor sentiment may weigh on the shares given diversification/dilution of the copper growth story and material
overlapping directorships/management between FCX, PXP and MMR.
Valuation: price target lowered to $40 from $47; Buy rating maintained Our revised $40 PT is based on a 60/40 weighting applied to our 5.00x
(down from 5.75x to reflect near-term negative investor sentiment and lower energy multiples) NTM EV/EBITDA and 1.0x P/NAV valuations. Given the
implied return, the shares are rated Buy.
From BMO:
DeleteImpact
Negative. The move comes as both surprising and disappointing to the market
and resulted in a ~15% drop in the share price yesterday. FCX’s diversification
into oil and gas arguably removes a key investment draw of the company in its
copper exposure. After the deal, pro-forma net debt is expected to increase to
US$16B, from net cash of US$0.2B in Q3/12, reducing or eliminating the
likelihood of any increase in cash returns to shareholders. The purchase suggests
management sees a lack of attractive growth opportunities within the copper
sector. Most perturbing, in our view, is the lack of opportunity for shareholders
to vote on a transaction that is two-thirds the market cap of FCX, especially
given management's financial interest in one of the targets.
Forecasts
BMO Research has not adjusted its base case FCX forecasts as yet.
Valuation
BMO Research’s estimate of FCX’s NPV at US$48.34/share is unchanged
subject to combing the three companies.
Recommendation
Shareholders may seek to lobby the board for a vote on this transaction, or if not
listened to, possibly remove the board. The bids may well be accretive, but recent
history suggests otherwise, and FCX does not have the management to assess
petroleum ventures. On possible diminished shareholder returns, unwanted
diversification and self-inflicted loss of trust, BMO Research downgrades FCX to
Market Perform with a reduced price target of US$30, or 0.6x NPV.
I agree with the comments below. And who benefits? I can't finish the article but my spidy sense are tingling after seeing ur comment here ==> "and material
Deleteoverlapping directorships/management between FCX, PXP and MMR."
I forgot which article I got the comments below from but I agree with Hambro's comments
Hambro Comments
The strategic justification for the two deals was questioned by BlackRock Inc., which has an 8 percent stake in Freeport, according to a February filing. Evy Hambro, manager of BlackRock’s $12 billion World Mining Fund, said on the conference call that Freeport investors should be allowed to vote on the deal. The Freeport stock used as payment isn’t sufficient to require a vote by shareholders, according to the mining company.
“Congratulations on making one of the worst teleconferences I’ve ever heard to justify a deal,” Hambro told Adkerson. “I haven’t heard anything on this call that in any way justifies why these companies should be put together.”
Investors have the freedom to diversify their own portfolios “and don’t need management teams to do it for them,” Hambro said.
“I hope you’re not going to be jumping to conclusions too quick and look at the history of why we’ve been successful in the past,” Jim Bob Moffett, Freeport’s chairman and also McMoRan’s co-chairman and CEO, said on the call in response to Hambro’s comments.
Nice counter-view, thanks BB. Btw the above is from UBS.
DeleteGold stocks firming from opening weakness.
AAPL filled it's gap. I have to believe strong hands step in here. 523ish.
ReplyDelete'don't' step in here.
DeleteSQNM - Going to test $3.25?
ReplyDelete