10/6/11: Adding Yield and Pulling Out the Stops
Wildcatters Portfolio
SandRidge Mississippian Trust I (NYSE: SDT) went public in April 2011 and owns royalty interests in 37 horizontal wells producing oil and natural gas from the Mississippian formation in Oklahoma and a stake in 123 additional horizontal wells to be drilled over the next few years by the grantor, SandRidge Energy (NYSE: SD). All of these wells are located on a 64,200 acre “area of mutual interest” (AMI) in Oklahoma’s Alfalfa, Garfield, Grant, Major and Woods counties.
A high-yield play on a rebound in WTI prices SandRidge Mississippian Trust I rates a buy up to 24 in the Wildcatters Portfolio.
Read more…
Proven Reserves Portfolio
Oasis Petroleum’s 7.25% Bonds Maturing in 2019 (CUSIP: 674215AA6) yield 8 percent and offer some potential for price appreciation after the recent correction.
Oasis Petroleum’s 6.75% Bonds Maturing in 2019 rate a buy up to 100 in the Proven Reserves Portfolio. Note that bonds are quoted as a percent of par, so a bond trading at 100 actually costs $1,000 per bond. Buying bonds isn’t as easy as buying stocks. You may need to call your broker and provide the following CUSIP number: 674215AA6.
Read more…
Gushers Portfolio
On Feb. 27, 2010, we added Valero Energy Corp (NYSE: VLO) to the Gushers Portfolio as a shorter-term investment that stood to benefit from improving fundamentals. After the stock ran up substantially, we sold half our initial position in the Jan. 19, 2011, issue for a roughly 42 percent gain and downgraded the stock to a hold. We also bumped the stop-loss order on the position to 22.50.
On Aug. 4, 2011, the stock dipped before our stop-loss threshold to an intraday low of $20.88. In this worst-case price scenario, investors booked a 20 percent profit on their remaining investment. In total, this amounts to a 31 percent profit on our initial investment.
Although we continue to regard Valero Energy as one of the best-positioned US operators because the flexibility of its refineries enables the firm to process less-expensive varietals of crude oil, the stock could struggle amid concerns that economic weakness will dampen demand for gasoline and other refined products. We will track the stock as a hold in the Energy Watch List.
We added Spirit AeroSystems (NYSE: SPR) to the Gushers Portfolio in the March 24, 2010, issue and set a stop-loss threshold of $15.50. On Aug. 8, 2011, the shares fell to an intraday low of $15.19. In this worst-case scenario, investors suffered a roughly 33 percent loss.
At current levels, shares of Spirit AeroSystems trade at an attractive valuation. We continue to like Spirit AeroSystems’ post-2012 growth prospects and will consider adding the stock to the Alternative Energy Field Bet.
On Aug. 19, 2011, shares of Gushers Portfolio holding Tenaris (NYSE: TS) breached our stop-loss threshold of $31 on their way to an intraday low of $30.88–a 20.9 percent loss from our entry point on Oct. 7, 2009.
Tenaris is the world’s leading producer of steel pipe products and tubular goods, or oil country tubular goods (OCTG) in industry parlance. The Luxembourg-based company outfits all three segments of the energy industry, from upstream (exploration and production) to midstream (pipelines and other transportation infrastructure) and downstream (refineries).
Over the long term, Tenaris’ global reach, commitment to quality and close relationships with customers should ensure that the firm reaps the rewards of an improving product mix as spending on deepwater drilling activity increases. Despite the prevailing bearishness, Brent crude oil continues to command more than $100 per barrel–a level that should support ongoing investment in deepwater projects.
Shares of Tenaris are a bargain at current prices. We are reinstating the stock to the Gushers Portfolio as a buy up to 37.
Read more…
SandRidge Mississippian Trust I (NYSE: SDT) went public in April 2011 and owns royalty interests in 37 horizontal wells producing oil and natural gas from the Mississippian formation in Oklahoma and a stake in 123 additional horizontal wells to be drilled over the next few years by the grantor, SandRidge Energy (NYSE: SD). All of these wells are located on a 64,200 acre “area of mutual interest” (AMI) in Oklahoma’s Alfalfa, Garfield, Grant, Major and Woods counties.
A high-yield play on a rebound in WTI prices SandRidge Mississippian Trust I rates a buy up to 24 in the Wildcatters Portfolio.
Read more…
Proven Reserves Portfolio
Oasis Petroleum’s 7.25% Bonds Maturing in 2019 (CUSIP: 674215AA6) yield 8 percent and offer some potential for price appreciation after the recent correction.
Oasis Petroleum’s 6.75% Bonds Maturing in 2019 rate a buy up to 100 in the Proven Reserves Portfolio. Note that bonds are quoted as a percent of par, so a bond trading at 100 actually costs $1,000 per bond. Buying bonds isn’t as easy as buying stocks. You may need to call your broker and provide the following CUSIP number: 674215AA6.
Read more…
Gushers Portfolio
On Feb. 27, 2010, we added Valero Energy Corp (NYSE: VLO) to the Gushers Portfolio as a shorter-term investment that stood to benefit from improving fundamentals. After the stock ran up substantially, we sold half our initial position in the Jan. 19, 2011, issue for a roughly 42 percent gain and downgraded the stock to a hold. We also bumped the stop-loss order on the position to 22.50.
On Aug. 4, 2011, the stock dipped before our stop-loss threshold to an intraday low of $20.88. In this worst-case price scenario, investors booked a 20 percent profit on their remaining investment. In total, this amounts to a 31 percent profit on our initial investment.
Although we continue to regard Valero Energy as one of the best-positioned US operators because the flexibility of its refineries enables the firm to process less-expensive varietals of crude oil, the stock could struggle amid concerns that economic weakness will dampen demand for gasoline and other refined products. We will track the stock as a hold in the Energy Watch List.
We added Spirit AeroSystems (NYSE: SPR) to the Gushers Portfolio in the March 24, 2010, issue and set a stop-loss threshold of $15.50. On Aug. 8, 2011, the shares fell to an intraday low of $15.19. In this worst-case scenario, investors suffered a roughly 33 percent loss.
At current levels, shares of Spirit AeroSystems trade at an attractive valuation. We continue to like Spirit AeroSystems’ post-2012 growth prospects and will consider adding the stock to the Alternative Energy Field Bet.
On Aug. 19, 2011, shares of Gushers Portfolio holding Tenaris (NYSE: TS) breached our stop-loss threshold of $31 on their way to an intraday low of $30.88–a 20.9 percent loss from our entry point on Oct. 7, 2009.
Tenaris is the world’s leading producer of steel pipe products and tubular goods, or oil country tubular goods (OCTG) in industry parlance. The Luxembourg-based company outfits all three segments of the energy industry, from upstream (exploration and production) to midstream (pipelines and other transportation infrastructure) and downstream (refineries).
Over the long term, Tenaris’ global reach, commitment to quality and close relationships with customers should ensure that the firm reaps the rewards of an improving product mix as spending on deepwater drilling activity increases. Despite the prevailing bearishness, Brent crude oil continues to command more than $100 per barrel–a level that should support ongoing investment in deepwater projects.
Shares of Tenaris are a bargain at current prices. We are reinstating the stock to the Gushers Portfolio as a buy up to 37.
Read more…
Stock Talk
Add New Comments
You must be logged in to post to Stock Talk OR create an account