(26 votes, average: 3.27 out of 5)
Loading ...Your being flung around like an insect fused to a car antenna doing ninety down the freeway, I mean. This is total insanity and, if you presently feel compunction for putting yourself in this situation, allow me to impart a few words:
I fucking told you so.
Really, diametric economic readings, complicated supply concerns, uncertain consumer demand, an inundation of contradicting analyst reports, destructive legislation, cut throat politics, end-of-the year imaginative accounting, desperate fund managers, frantic bears, possibly upended leadership (think Bernanke confirmation prospects) and near dismissive volume, all covered by an increasingly abysmal media system; December has it all, and still finds the time to be heartlessly cold.
As I peaked in throughout the afternoon, know that I had no desire whatsoever to join in the festivities of your being broken, perpetually, against a cliff. I did my work (there is something to be said for secured revenue), all day, while reading a diverse array of papers in all matters of thought and sipping on a mixture of orange juice, cactus juice, and patron, on the rocks.
I’m holding GKK, SLB, MO, NRP, RMCF, VZ, LPHI (my secret to any not on The PPT, until now), and PNY. I have an enormous margin position (counting all credit) of thirty percent. To temper this, I’ve taken a short position in NOV, which has been performing admirably. My beta posturing is still net long, but has been greatly dampened.
It is my intention to hold this position throughout most of December, before catching a sudden move down. My aim is to accumulate equity and commodities, especially precious metals, not dollars, and so I will not be relinquishing any longs with the possible exception of PNY or GKK; of which PNY was purchased to be a play on an unexpected increase in demand of natural gas for heating this winter cycle; and GKK is just a high risk play that maybe will pan out, like RSO before it.
I do, though, have hopes for the long term prospects of natural gas and may hold PNY indefinitely. And, in the event that GKK reinstates a dividend policy, it may be more worth while to hold the position, barring close scrutiny of its present exposure to financial junk.
That’s where things stand with me. If you went into this month with large exposure and a craven attitude, it may be in your best interest to consolidate, or else get unprecedentedly drunk and stop watching the news.
Now THAT is a post worthy of a King…
Time to get light, Dwight.
_______
Okay, in the natty space what do you think of UPL?
I looked through UPL’s SEC filings, and calculated the companies actual value to be somewhere around $3.50 a share. Obviously, that puts it at a nasty 12 times book value. Moreover, they have been increasing debt substantially (by itself, not a bad thing, since dollar depreciation makes borrowing a wise activity as of late), but they haven’t actually seemed to use that money to reinvest in capital expenditures. In fact, capital investment is way down on the name.
Consider, many of the well situated oil names have been using this opportunity to spend some cash and expand base production abilities.
Also, they have at least one more loss from tax deferment in the works, which will likely be realized sometime next year. Their cash has been flowing steadily out of the company (good), but I have no idea where the hell it’s going. It’s not going into company stock, capital, or any asset I could spot (bad). Maybe it all got absorbed in that $1 billion energy reserve write down that took through the teeth?
However, it doesn’t seem that oil is their primary concern, despite the companies moniker. They have a large stake in the natural gas sector, and, whatever their financial burdens, an upward move in the valuation of natty could spur a run in this name.
I personally don’t like the name because I’m exposing myself to risk primarily through debt and already have a lot of commodity names. Thus, I like dividend cash flow to reduce this debt and, simultaneously, my risk exposure. This company has none, I already have exposure to the space, and, so I wouldn’t really be that tempted to touch it. But then, you aren’t me.
Depending on your personal allocations, I’d keep this on your watch list and buy under two conditions:
1) You are willing to take on substantial risk under the presumption that natural gas will spur a recovery.
or
2) In the future, this company takes a baseball bat to the forehead and collapses below $10, at which time, it will likely have “takeover target” written all over it; since the name feels like it’s pricing in a recovery, that would be assuming the present financial conditions hold constant, of course.