GRG 55 might be on to something

[GRG55]

Re: GRG 55 might be on to something

Oil is going into the teens. It will stay there as long as Saudi wants it to.

its not about how long long Saudi "wants". It's about how long it can stand that much pain. (Answer: not long).

[touchring]

Re: GRG 55 might be on to something

Anyone remembers 2016? I totally missed that dip. But I'm still watching.

EDIT: Suncor now at CAD27.56. Maybe I should get some more?

[touchring]

Re: GRG 55 might be on to something

Just added some SU. Just can't resist it.

[touchring]

Re: GRG 55 might be on to something

its not about how long long Saudi "wants". It's about how long it can stand that much pain. (Answer: not long).

I agree on the not long. Do you have any opinion on OXY? This really puzzles me. Why would Buffett buy this company, which doesn't even have a PE? The price has fallen by two thirds just this month.

[GRG55]

Re: GRG 55 might be on to something

I agree on the not long. Do you have any opinion on OXY? This really puzzles me. Why would Buffett buy this company, which doesn't even have a PE? The price has fallen by two thirds just this month.

As I've posted before, Suncor below Can $28 on the TSX is a buy. Once it goes back over $40 it is time to start peeling off parts of the position. It's a trade, not an investment. At Can $45 you should be out.

OXY is absent from my previously ranked list. For good reason.

OXY probably makes a better acne soap than oil company. I have never been a fan o,f the company as it has a culture of running the company for the benefit of management and the Board over shareholders. This dates back to the days of Armand Hammer and Ray Irani, who ran the thing as their personal plaything. It's in the corporate DNA. Google "Ray Irani".

I don't think Buffett/Berkshire bought the company as you suggest. OXY overpaid to buy Anadarko in August 2019. They decided to top Chevron's offer after it put Anadarko in play. Chevron declined to increase its original bid. That should tell us all something about the comparative quality and discipline of Chevron's executive team and Board compared to Occidental.

Berkshire provided much of the financing to OXY to close the Anadarko deal. You can bet Buffett has a preferred position through whatever exotic financial instrument was created to secure that funding, and a claim ahead of other shareholders.

[Milton Kuo]

Re: GRG 55 might be on to something

Berkshire provided much of the financing to OXY to close the Anadarko deal. You can bet Buffett has a preferred position through whatever exotic financial instrument was created to secure that funding, and a claim ahead of other shareholders.

Yep. Buffett put in $10B to help Occidental acquire Anadarko. In return, he got preferred stock that pays an 8% dividend that can be paid in cash or shares. Buffett's dividend is not being cut unlike the common bagholders.

Occidental Slashes Payout for First Time in 30 Years on Rout

Warren Buffett’s Berkshire Hathaway Inc. helped finance Occidental’s purchase of Anadarko last year with a $10 billion preferred stock investment. That stock generates dividends of 8% annually for Berkshire, which Occidental can pay in cash or shares. That arrangement isn’t affected by today’s dividend cut.

And here's an opinion piece from Bloomberg on the Occidental purchase of Anadarko.

Oxy's Slashed Dividend Is Now Just Half of Warren Buffett's Payout

[touchring]

Re: GRG 55 might be on to something

Yep. Buffett put in $10B to help Occidental acquire Anadarko. In return, he got preferred stock that pays an 8% dividend that can be paid in cash or shares. Buffett's dividend is not being cut unlike the common bagholders.

Thanks, so it appears that Buffett looks more like a creditor to OXY rather than a shareholder.

[touchring]

Re: GRG 55 might be on to something

As I've posted before, Suncor below Can $28 on the TSX is a buy. Once it goes back over $40 it is time to start peeling off parts of the position. It's a trade, not an investment. At Can $45 you should be out.

SU closed at CAD27.74! When you posted that, I didn't thought it was possible. We're heading back to the 2016 and even lower in fact. History repeating itself and we know it won't stay this low for long. It's really a no brainer opportunity.

OXY is absent from my previously ranked list. For good reason.

OXY probably makes a better acne soap than oil company. I have never been a fan o,f the company as it has a culture of running the company for the benefit of management and the Board over shareholders. This dates back to the days of Armand Hammer and Ray Irani, who ran the thing as their personal plaything. It's in the corporate DNA. Google "Ray Irani".

I don't think Buffett/Berkshire bought the company as you suggest. OXY overpaid to buy Anadarko in August 2019. They decided to top Chevron's offer after it put Anadarko in play. Chevron declined to increase its original bid. That should tell us all something about the comparative quality and discipline of Chevron's executive team and Board compared to Occidental.

Berkshire provided much of the financing to OXY to close the Anadarko deal. You can bet Buffett has a preferred position through whatever exotic financial instrument was created to secure that funding, and a claim ahead of other shareholders.

Much appreciated!

[thriftyandboringinohio]

Re: GRG 55 might be on to something

SU closed at CAD27.74! When you posted that, I didn't thought it was possible. We're heading back to the 2016 and even lower in fact. History repeating itself and we know it won't stay this low for long. It's really a no brainer opportunity...!

touchring I'm looking at it that way too. I sat out the last recovery in equities and missed all that price appreciation in the eleven year bull market (God rest its soul). I did well on my rental real estate though, but still...
I'll be looking for buying opportunities this time around. All I have to do is figure out when we're at the bottom and whether or not prices will go sideways for 15 years again like they did between 1999 and 2014.

[jk]

Re: GRG 55 might be on to something

All I have to do is figure out when we're at the bottom and whether or not prices will go sideways for 15 years again like they did between 1999 and 2014.

more like late '60s to early '80s. but if so, natural resources will do ok

[touchring]

Re: GRG 55 might be on to something

touchring I'm looking at it that way too. I sat out the last recovery in equities and missed all that price appreciation in the eleven year bull market (God rest its soul). I did well on my rental real estate though, but still...
I'll be looking for buying opportunities this time around. All I have to do is figure out when we're at the bottom and whether or not prices will go sideways for 15 years again like they did between 1999 and 2014.

After the Ka will be the Poom? The price has fallen again and from the look, it will continue falling until Iran makes a move...

[Down Under]

Re: GRG 55 might be on to something

I'll be looking for buying opportunities this time around. All I have to do is figure out when we're at the bottom and whether or not prices will go sideways for 15 years again like they did between 1999 and 2014.

Good man,

When you figure it out, make sure you let the rest of us know. Picking the bottom, according to EJ, is being within 10% of the bottom, if my flaky memory serves me correct.

I know I'd be happy within 10% of the bottom.

[thriftyandboringinohio]

Re: GRG 55 might be on to something

Good man,

When you figure it out, make sure you let the rest of us know. Picking the bottom, according to EJ, is being within 10% of the bottom, if my flaky memory serves me correct.

I know I'd be happy within 10% of the bottom.

That's always been my view. Selling close to a top is good enough for me, same with buying close to a bottom.

Even that can get tricky in a broad and extended cycle reversal. An upswing that looks good for a few months can be followed one more leg down.
The Dow climbed sharply for all 12 months of 1975 but it was just a giant dead cat bounce with losses for another 6 years after.

[ST]

Re: GRG 55 might be on to something

its not about how long long Saudi "wants". It's about how long it can stand that much pain. (Answer: not long).

I tend to think Rosenberg has it right on this - the Saudis can go a long time like this considering their cost and they have even more motivation than when they did this last go around over a period of 1.5 yrs it down 65% to $26 and change (equivalent would be $15 and change)... put US shale to bed (which Russia also wants) and take advantage of Russian's precarious financial position at the moment wrt debt servicing.

IMO - Throw in covid and zero tools on a plain vanilla recession, let alone this and I'd err on the side of waiting.

Last time I looked Royal Dutch Shell was in the best balance sheet & cash flow situation by far for oil assets (?) I tend to like SLB, for long haul - some of these I have to think eventually go private with eventual big dividend payouts later (after they cut short and intermediate term) and as exodus continues with the long trend of 'responsible' investments slowly but persistently edging institutions out of the stocks.

Agree on cruise stocks, been watching also. I like defense as well long term.

Interesting to see how beneficiaries of covid like Amazon and Zoom Video Comms. are performing.

In other news, here's my hand drawn estimation of the performance of my long put buy:

[touchring]

Re: GRG 55 might be on to something

I tend to think Rosenberg has it right on this - the Saudis can go a long time like this considering their cost and they have even more motivation than when they did this last go around over a period of 1.5 yrs it down 65% to $26 and change (equivalent would be $15 and change)... put US shale to bed (which Russia also wants) and take advantage of Russian's precarious financial position at the moment wrt debt servicing.

Have you seen this report on Rosenberg in January?

https://business.financialpost.com/i...heap-right-now

Agree on cruise stocks, been watching also.

Cruise stocks are indeed interesting, along with airlines.

I'm comparing RCL and CCL. CCL appears to have lower debt, but the stock price has been dropping since early 2018 from $68 to $40 even before the coronavirus crisis. RCL on the other hand appears to be trading between $110 to $130. Do you know why?

Given the short term nature of the pandemic, I'm not concerned about whether I can buy at 10% of bottom, but rather the possibility of bankruptcy within the next year or so.


https://seekingalpha.com/symbol/CCL
https://seekingalpha.com/symbol/RCL

I like defense as well long term.

Do you mean something like Boeing or General Dynamics?