Shiv

OPEC and Production Cuts: Why Now's the Time to Buy

you can get the numbers from EIA's website. This www.eia.doe.gov/steo links to an EIA article; numbers are largely from files available on the bottom right hand corner of thw webpage.


On Dec 02 09:01 AM bertil wrote:

> Excellent clear thinking backed up with (hopefully reliable?) facts.
>
> My question: Why do you prefer BP to other integrated oil companies?

OPEC and Production Cuts: Why Now's the Time to Buy

mainly div yield & turn-around potential; in prior upcycle they were plagued with misfortune & qhse problems - I think the right steps have been taken to effect a powerful turn-around.


On Dec 02 09:01 AM bertil wrote:

> Excellent clear thinking backed up with (hopefully reliable?) facts.
>
> My question: Why do you prefer BP to other integrated oil companies?

OPEC and Production Cuts: Why Now's the Time to Buy

WTI = $75. Rest get penalty or premium on WTI depending of it is heavy or light sweet crude.


On Dec 02 08:39 AM paultaut wrote:

> Opec crude is priced about $5 below WTI because it is a basket of
> oil grades. Meanwhile the garbage crude produced by Iran and Venez.
> is about $10 below.
>
> When the target of $75 is bandied around, are the Marginal suppliers
> getting $65 or does the $75 refer to Iran/Venez. and WTI is really
> $85?
>
> Can you clarify?

Sectors Benefiting from BRICs' Growth

Kingsley - I feel you are correct on POT re-testing $60. In fact I am not sure that that price level will hold. As a worst case scenario I cannot rule out $50 to $55. Eventually the remaining downside is not significantly higher than the broad market downside. On the upside, I have a high degree of confidence to a level of $140 over 5 years. Over a longer period, the sky is the limit - this is why I feel MON/POT have multi decade potential; yet in terms of a single economic cycle they have not quite made it to my portfolio.


On Nov 17 08:09 AM Kingsley wrote:

> While I respect your thoughtful commentary and do not dispute the
> notion that Potash and Monsanto will eventually rise, now is not
> the time to be purchasing shares of either. In regards to Potash,
> it looked like it be forming an inverted head and shoulders pattern,
> but then the price crashed back down. POT looks like it will be
> retesting the 60.

Sectors Benefiting from BRICs' Growth

Zenstar66 - POT, MOS, AGU & IPI are all good stocks. It is just that the portfolio was designed to look for capital appreciation backed by handsome yields. Combining the two criteria, these stocks never made it into my final selection.



On Nov 17 07:35 AM zenstar666 wrote:

> You stated the "capital appreciation" for POTand MOS does not look
> attractive. Except for the financial crisis which unjustifiably brought
> their share prices down along with the entire commodity sector,
> their fundamentals, along with those of AGU and IPI, going forward
> appear to be decoupled from their share prices and tell a much different
> story. Am I missing something???

It Is Still a Bear Market

From the bulls - there are a bunch of stocks trading at amazing values. Buying prices do not represent fair value when looking at growth in a medium term context - this is an opportunity to buy. While the SP500 might hit 740 at a bottom, it makes no sense to wait; it might never happen. In the interim, values are good and several are supported by sustainable dividends. 100% upside in medium term is probable, downside is maybe 15%, so risk reward equation is stacked in favor of buyers.
Have a look at CCL HD DAI BP RDS-B AXA PFE DELL INTC NOK AA MT FCX DD VOD SI DE KFT - all compelling valuations with strong yields with a maximum yield drop expectation of between 0% and 20%. I'd go heavy on industrials, energy & materials as those will drive once growth returns - you can look for growth being financed more through equity and less through debt - so project quality will be better because they will only be taken when cost of equity is below return on equity. Growth, once barriers are removed is a compelling force; nothing can stop it. Emerging Market Global growth drivers are intact - in a couple of years you will see the most amazing and aggressive growth return.

Latest Dow Jones Index is Flawed

I thought it was a pretty good index. By thr way, there are 4 from India Reliance Industries Limited, Bharti Airtel, Infosys & Tata Steel.

Ten High Yield, Below Book Stocks

MT dividend is $1.50/share. The $1.28/share is after Lux withholding tax which should be creditable to taxpayers. So yield is over 7%.

Three Favorite Mining Investments

I am with you on inflation, the commodities boom and the recession. I do believe US may be unable to compete on its home turf but US corporates will remain leaders in the global arena. As far as strategy is concerned, I have been very defensive and have held a huge overweight on healthcare. Now I am begining to swap my healthcare holdings for metals; particularly when I can get a yield premium (for example, swap shares in PFE for MT when yield is equivalent). In metals I think MT is the king of steel and they are very undervalued at present. In energy BP is one I have my eye on - I feel it will be 3 to 6 months before commodity prices undershoot long term equilibrium prices and that is the time to buy. Also am keeping an eye on SLB for a better entry point. I also like Monsanto, their seed business is poised for big time success - like you say, the population is expanding and Monsanto is the one company which stands to benefit from urshering in the next green revolution.

Long Ideas in Indian Markets

Atul - I think the best way to get exposure to the Indian market is through IIF & IFN. It is not necessary exposure to Nifty and Sensex, but it is exposure to a selection of quality listed stocks. Closed ended funds tend to trade at a discount to NAV, so if you intend to hold long term, this is a decent entry strategy.

Why Smart Money Should Buy Dell

Dell has been an incredibly poor long term investment. It has managed a pathetic 20 year return of near 28.5% annualized over the last 20 years and that is a shameful performance; it has only outperformed the broader indexes by some 438% during this period.

Why Smart Money Should Buy Dell

Walt17 - the value of Dell's supply chain is of prime importance in understanding why Dell creates value and free cash flow. This will deteriorate somewhat as Dell enters the traditional sell through retail segment; however, the deterioration is built into lower expectations of future free cash flows.

This post is not really about Dell's balance sheet, it is about Dell's ability to generate free cash flows. They are succesful because of incredible supply chain management which is perhaps second only to WMT's supply chain. Using the balance sheet to determine liquid reserves is just to identify what they have today which could be invested or distributed; what remains on the balance sheet & payables is a maintainable structural advantage Dell possesses.

Standard & Poor's Lowers S&P 500 Index's Expected 2008 Dividend

Interesting; if dividends come in at $28, at 31X dividend, 870 odd is a possible bottom for the market in 09. FYI the lowest dividend multiple the SP500 has ever traded at over the past 20 years is 31.

Credit Default Swaps, Part One: Origins and Implementations

I would argue that the old risks (a. Default on the payment of interest, b. Insolvency of the issuer, c. Pre-payment of the loan [with interest]) are the only real economic risks. The CDS looks like it is essentially an instrument to shift risk from the owner of paper to an insurer. The question to which I cannot find an answer is whether CDS's are issued to a party with no insurable interest; for example could a person get cover for a Lehman Default event without owning the underlying Lehman paper. If the answer is yes, the question of whether the so called insurance contract is legally binding arises because of the absense of an insurable interest.

I have no doubt that the availability of a CDS will have encouraged lenders because they thought the risk was covered. It is true that this would have led to an over-leveraged economy (which is no secret). But the real economic risks associated with credit default are the same.

The way I see it is that a CDS did not really separate risk from the instrument; it failed to achieve its purpose. If an insurer goes bankrupt for failing to pay its obligation; it will result in a distress sale of the insurers assets to pay out the obligation to the fullest extent possbile. The buyer of the distressed paper will earn future profits being the difference between the actual recovery from the debtor and the price paid for the paper. In the mean time because the insurer defaulted, another insurer who insured the paper of the first insurer will find itself in the same position as the first insurer; again the second insurers assets will be sold in distress and the buyer will profit in the future. Ultimately, what will occur is that the weak hands will go insolvent while strong hands will gain assets bought at below fair value during a distress sale; the total impact will never be more than that part of the debt which actually went bad. So, instead of separating risk from the security, the CDS actually ended up creating risk for the economy. The real questions to answer are (1) where did the money go - that is where the bubbles will have formed and (2) how much of it will likely go bad.

Why It Is Important to Start Reinvesting Now

Timothy - I do not think energy has bottomed just yet. I think OPEC will cut. And I think the cut will cause oil prices to fall further because it will confirm an expectation of falling demand. The falling demand also means that as production grows in the future, there is existing supply which can satisfy it (because an OPEC cut will be of production not production capacity). Initial gut reaction will possibly be a hike in oil prices, but once things are thought through, it should fall. My guess is energy will bottom with oil very near $60; from here oil prices might well fall a bit further, but energy stocks will likely bottom before oil prices do (see magical pairs on maxkapital.blogspot.co... As far as the broader SP500 index is concerned, it may have bottomed at 840. But there is a chance that it will reach for 740 (740 is the level where SP500 will trade at a 20 year dividend multiple low which is indicative of an economy in outright panic; and even in such an environment I have a fair value of 1247 on the SP500, so for an investor it is a good time to be accumalating). Also did a post on the oil bull which sort of explains why I am not constructive on energy right now but am very positive on the sector longer term; its on maxkapital.blogspot.co...).