JP via RSS
BP British Petroleum>31.62 + $3.36 dividend
Buying Quality on Bad News
[This is a corrected enhanced enlarged revision of our first BP post on Monday 3 May 2010 when BP traded at a low of 47.35.]
Every now and then our beneficent universe hands us a splendid opportunity to make lemonade out of lemons, to find the silver lining of the dark cloud, to snatch victory from the jaws of defeat, albeit with a little irony.
By now anyone with remote access to current event news knows 11 people were killed Tuesday 20 April 2010 on a 53-mile offshore floating oilrig, the Deepwater Horizon.
Following on the heels of the fatal coalmine disaster, potential Pulitzer Prize Winners were on high oil spill alert.
This story not only bled and led, but also showed flames with dead animals and people to boot.
Each day the news got worse.
Spectres of delayed transportation, car and home losses, mass seafood starvation, transportation delays, pictures of dead jellyfish and sea turtles were imprinted into mass consciousness by bad news.
No matter that no oil was found on the turtles, and the oil is biodegradable by natural bacteria or fungus.
Mass monopoly media whipped everyone into a BP selling frenzy.
The Coast Guard and Interior Department stated it may be at least 90 days before the rogue well can be capped.
Pages: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
May 27th, 2010 at 12:55 pm
40.61 seems to be a tradeable low for BP, having lost $60 Billion in market cap, far more than expected liabilities, and yielding 8% like a utility…
June 10th, 2010 at 10:15 am
BP at 29 with 10+% yield a very attractive value.
(Dividend may be reduced in the future.)
June 15th, 2010 at 10:46 am
An important BP perspective update around our 3 May 2010 price with 11% dividend:
Brits own 40% of BP, Beyond Petroleum, the world’s third largest energy company and fourth largest company.
US shareholders own 39% of BP.
BP owns Amoco, Arco, Standard Oil of Indiana and Ohio, Burmah Castrol and half of TNK-BP, Russia’s third largest oil company. With TNK, BP has a tiger by the tail with all the Russian intrigues. BP, less an occupier than the USA, won the bid for Iraq’s largest oil field, which may rival Saudi Arabian reserves. BP still does business with Iran, 90% to BP and 10% to the Ayatollahs.
BP Amoco was rated the top petroleum brand in the USA 16 years.
BP destroyed its Clean Green brand sunshine logo with the oil spill, so a change of name may be in the future.
BP wants out of the US retail market due to American government red tape and taxes chafing the BP bottom line. BP closed corporate BP Connect gasoline stations as fast as they could, rebranding them as Conoco in Colorado or selling them to local jobbers in the South.
Unlikely BP missing a bet to open up natural gas and engine stations again like T Boone Pickens with CLNE up almost 7x, or WPRT up 20x since our closely-held ideas in 2009.
BP, the UK’s largest corporation, funds 14% of all UK dividends and pensions. Cutting the 11% BP dividend today to fund US and White House political wet dreams for the Kenyan and Co may be a non-starter for the future of Tony Hayward and most shareholders.
If it in fact occurs, it may be another deflationary nail in the coffin of the global leveraged derivative economy.
BP had revenues up to a billion dollars a day in recent years.
Deep pockets that can overlook a year’s lost income and bad PR might be interested. The 50% cut in market cap in 50 days discounting bankruptcy or re-nationalization may be overdoing it.
Kuwait made a run at BP that was rebuffed.
Maybe this time Kuwait or China CNPC will succeed in this Brave New World of Eco and Financial terrorism confronting petroleum politics as usual.
BP options at up to 120% volatility may be a better sell write than buy exercise…
June 15th, 2010 at 11:12 am
CNBC Herb Greenburg speculating XOM may acquire BP.
(Or CNPC or Kuwait.)
That would be a nifty way to back into the world’s largest company.
We just bought some BP under cover of the bad news bears bashing on The Hill…
June 15th, 2010 at 11:37 am
Please note there may be a pass-through ADR fee and taxes withheld on BP as a foreign ADR. Check with your tax adviser…