BrotherMaynard

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  • Oil's Rise Due to Fundamentals - UBS
    John L pretty much summed it up. That sort of myopic point of view that UBS is pushing is a losers game.

    In fact, the move just might be the complete opposite of fundamentals that drove the roundtrip over the past few days as USO and DJ-AIG Commodity trackers rebalanced their portfolios this week: FTAlphaville took a look at this: ftalphaville.ft.com/bl.../

    Jan 08 13:33 pm |Rating: +2 0 |Link to Comment |View article
  • ConocoPhillips: More Than Just a Great Stock
    "In terms of portfolio diversification, it is academically and statistically proven that the DJ-AGI is quite beneficial to any portfolio/investor&quo...

    So were asset backed securities and CDSes. My point being, everything looks good on paper, simply because on paper, its doesnt interact with anything. As we saw during 2008 -- all asset class correlations converge at 1 during a crisis. Corporate bonds tanked, commodities tanked, stocks tanked, real estate tanked...you name it and it tanked. So just a word of caution...just diversifying doesn't do you any good. Correlations can be broken or reversed, sometimes permanently, without a moments notice. What should you do? I'm not 100% sure, but just because something is empirically tested doesn't mean that the statistical sample is a complete descriptor of the statistical population.
    Jan 08 13:19 pm |Rating: +2 0 |Link to Comment |View article
  • Exxon Apostasy: A Closer Look at the Oil Giant's Real Valuation
    thanks for the original analysis. I couldn’t agree more that E&P’s in general are wildly overvalued at these energy prices. Credit suisse finally mentioned that (published via barrons):

    “At $45 [per barrel] oil and $6 [per MMBtu] gas (2009 curve currently at $44.25 [per barrel] oil and $6.00 [per MMBtu] gas), the stocks are trading at a 37% premium to NAV, with the gas-focused names at a 43% premium and oil E&Ps at a 22% premium.

    At $40 [per barrel] oil and $5.50 [MMBtu] gas (closer to current spot prices), the E&Ps are trading at a 65% premium-to-proved NAV with the gas names at a 75% premium versus 55% for the oilier names.”

    One thing about your XOM 09 ests…i haven’t looked but XOM probably has quite a bit of its production locked up via hedges I’d be surprised if it was anything less than 75-80% 09 hedged and 50% ‘10 hedged. so i’d be skeptical that eps will show 50% variance.

    (fyi...i posted this comment on your blog, too)
    Jan 05 13:08 pm |Rating: +4 -1 |Link to Comment |View article
  • Independent Refiners: Too Much Risk and Uncertainty
    If you read larry summers' piece in the wapo yesterday, you'll find that he hints about creating new jobs in the renewable sector. I have a feeling any favorable legislation going forward is going to be heavily geared toward this, as it actually sounds more like it is being designed strictly for job creation. I'm not saying i agree, but it doesn't look like building refineries is going to be a high priority for this bunch.
    Dec 30 12:02 pm |Rating: +2 0 |Link to Comment |View article
  • China and Russia Fuel Global Energy Growth
    "Should XOM cross to positive territory, it would be an encouraging sign for other oil and gas stocks and for oil price."

    On the contrary, Credit Suisse reported yesterday:

    "At $40 [per barrel] oil and $5.50 [MMBtu] gas (closer to current spot prices), the E&Ps are trading at a 65% premium-to-proved NAV with the gas names at a 75% premium versus 55% for the oilier names."
    Dec 30 11:50 am |Rating: +1 0 |Link to Comment |View article
  • Buying USO Is a No-Brainer
    RE: Jim rogers and inflation.

    What i don't understand is how jim rogers is calling for rampant inflation in the same breath that he is talking about how banks are gigantic black holes. Those two phenomenon are mutually exclusive.

    The fed. government borrowing is offsetting the contraction in credit demand in other parts of the economy. According to ML's Dave Rosenberg, fed gov't debt has grown 7% yoy from 3% a year ago...yet corporate debt growth has slowed from 11% to 9%...household hebt has fallen to 4% from 8% yoy and muni borrowing has also been whacked in half from 10% to 5%. All told total credit growth of the economy, which a year ago was 8.5% has slowed to 6.7%...even with the massive fiscal stimulus out of washington. The efforts of the fed are still not enough to offset the debt vaporization process. For example, consumers saved $370bn in Sept and Oct alone...4x the previous rate...add another $125bn extracted from equity markets during those two months and you have half a trillion. In addition, cash on balance sheets of banks has surged 165% yoy, yet C&I loan growth is still negative. simply put, banks are the gate keepers to the money supply. If the gate keepers are half dead, they are not going to be opening the gates.

    So its still absolutely baffeling to me why jim rogers is calling for rampant inflation while at the same time claiming that the financial sector in the US is ruined. The ruination of the financial sector at this point disallows the prospect of the hyper-inflation a lot of people are blindly, and non-rigorously calling for.
    Dec 28 17:24 pm |Rating: +2 0 |Link to Comment |View article
  • Chesapeake Energy Unable to Rally Even After Positive News
    RE: the first two comments

    Never take advise from people that drop ad hominems and react with emotion. both of those traits have no business with investing.

    CHK has some serious issues if nat gas continues its downtrend. Sub $5 and $4 start to inhibit the effectiveness of hedges. We're in the midst of the worst economic recession in decades. Keep in mind nat gas fell into the $2 rage during the last recession. And that recession wasn't even consumer led. Industrial production falloff is already muting the effects of the colder winter, coupled with serial overproduction by e&P's, like CHK, will mean heavy oversupply and much lower prices are inevitable. CHK also has debt covs that get triggered at certain ebitda/debt ratios...with lower prices, ebitda will be impaired...so unless you know when/how those covs are affected, please do not invest (short or long) in this stock. Its too risky and there are plenty of other cheap investments without the balance sheet risk.

    Dec 26 12:19 pm |Rating: +2 0 |Link to Comment |View article
  • Buying USO Is a No-Brainer
    Nothing is a "no brainer" in investing. That sort of cavelier and careless attitude has lost a lot of people money in this environment.

    Who's to say oil and commodities won't face a lost decade? They rode the tails of easy credit just like everything else. The scarcity meme only works when supply and demand are tight. And considering that this is the worst downturn since Jimmy Stewart hailed glad tidings to the movie house, supply and demand are not going to be tight for some time.

    Its easy to see why commodities look so good...for the past 8 or 9 years, they've been multi-baggers...but so has Chinese growth. I'm still wondering who China is going to export to, esp. given that the majority of their growth is geared for exporting only. The ravenous demand out of china was merely the inputs necessary for their massive exports to the Western world.

    If anyone learns anything in this mess, its that you shouldn't extrapolate at extremes. Commodity demand reached a pinnacle (along with credit) and investors continue to extrapolate that demand trend, which is clearly a thing of the past (along with credit). That's the variant view.
    Dec 26 11:49 am |Rating: +5 0 |Link to Comment |View article
  • Chesapeake Energy: Back from the Dead
    that would be great if someone elaborated on their debt covenants and when/if they can be triggered at lower ebitda/debt ratios and figure out what nat gas prices would be consistent with those ratios. If you can't do that, don't touch this stock.

    No positions
    Dec 18 12:21 pm |Rating: +2 0 |Link to Comment |View article
  • Chesapeake: When Gas Prices Will Recover
    "Barclays: US gas needs to go below $4 to balance oversupplied market"

    www.platts.com/Natural...
    Dec 12 20:50 pm |Rating: +2 0 |Link to Comment |View article
  • Chesapeake: When Gas Prices Will Recover
    Great rationale, weiwentg. this site needs more of this sober analysis. commodities are a completely random variable. all a conservative investor can do is buy a business that can thrive no matter what the price -- Be it $2nat gas or $12 nat gas. CHK used to be able to do that until their capital structure recently became prohibitave. This is, again, where mcclendon's ideologue-mentatlity ("nat gas will never go to $2") has seriously jeoprodized its long-term prospects. Yes they have lots of valuable real-estate...but this is precisely the worst time in history to attempt large-scale, premium-inclusive, monetization of large assets. I'd throw Rio Tinto in this bin, too.


    On Dec 11 09:17 AM weiwentg wrote:

    > It does sound to me like Aubrey has a handle on his company's financial
    > situation and his hedge book. However, what worries me is that he
    > seems to assume he can sell assets in every environment. He managed
    > recent large sales to BP and Norsk Hydro in a very difficult environment,
    > but that's not a reason to assume he can keep doing that. Remember
    > what Charles Prince said about how Citi was still dancing?
    >
    > The comment about Aubrey being a buccaneer really did it for me.
    > The guy is hyper-aggressive. I happen to think he has a high chance
    > of making it big. That said, there's downside risk in that if natural
    > gas gets under, say, $4 for an extended period, I can see a situation
    > in which he drives the company into the ground (meaning it needs
    > a highly dilutive capital injection or files bankruptcy). Sub $4
    > natural gas is a bit of a doomsday scenario, but you can never tell
    > what commodity prices will do.
    Dec 11 12:08 pm |Rating: +1 0 |Link to Comment |View article
  • Energy Roundup: Chesapeake Changes Its Plans
    via morningstar:

    "Under a low scenario of long-term natural gas prices of $5, we believe Chesapeake is worth around $8. In this hypothetical low case, we expect production growth and capital spending to drop considerably and costs to moderate. We also think that the firm's projects in Appalachia, Fayetteville, and Haynesville would become top priority given their superior economics. In a high side case of long-run natural gas prices $10, we anticipate that growth would kick into high gear, with cost inflation to follow. Under this scenario, Chesapeake is worth around $145."

    I'd rather buy a lottery ticket.
    Dec 11 11:58 am |Rating: +1 0 |Link to Comment |View article
  • Oil Speculators: Still Waiting for that 'Thank You'
    "Speculators do not move markets they follow market movements they do not control markets."

    just like tech and housing and credit and...
    Dec 10 13:47 pm |Rating: 0 0 |Link to Comment |View article
  • Chesapeake: When Gas Prices Will Recover
    Other famous ideologues - Bernie Ebbers, John Mackey, Jeff Skilling...all lived in a perpetual state of denial. The reason why everybody likes them so much is simultaneously why they shouldn't be liked and their stocks should be avoided.
    Dec 10 13:45 pm |Rating: +3 0 |Link to Comment |View article
  • Oil Speculators: Still Waiting for that 'Thank You'
    "you can't be serious -

    thank speculators for shafting consumers, airlines, general motors, etc.?"


    i agree. congress is a form of representation. The majority of the constituents that congress represents are net short oil. congress starts complaining when people start complaining. don't blame congress, blame the 300 million people that are being whacked for the sake of "market liquidity"...ubel...
    Dec 09 12:32 pm |Rating: 0 0 |Link to Comment |View article

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