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Mark Hays
Robert I know you at one time held Westport WPRT in your portfolio. With the recent downturn what do you think about buying it? Seems like Cummins would perhaps acquire it?
Robert Rapier
That was always the thought; that there was enough value there that Cummins would buy them out. I still like the space, but Westport’s management made some moves that made me lose trust in them. Once I lose trust, I am done. I got out with a minimal loss, but it’s seen a very steep decline since. I sold around $25; I see it closed today at $6.75.
Current oil pricing and OPEC starting to have a little discord within is now driving some crude prices down. How long do you see this fight continuing and in the upcoming earnings seasons do you see potential estimates for earnings cut from the drillers and hurting stock prices significantly example EOG, WLL? It seems some of the MLP’s are also feeling sympathy pains. For a short term move a few months would you lock in gains and reset pricing?
Robert Rapier
Don, I think the downside is pretty limited at this point. Prices could hang around at this level for a few months, but most oil companies have already become oversold in my opinion. I am a buyer right now of several companies, not a seller. We took profits on a number of holdings back in April, but some of those companies are starting to look very appealing again.
In your October 22 Energy Strategist issue, you suggested buying into a stock “several installments over time.” I bought 1,000 shares of Emerald Oil yesterday. That was a very good call on your part since it is up 5.5% today. Assume that my goal for Emerald is to own 4,000 shares and that I will buy 3 more 1,000-share installments. What rules do you have as to when each of those additional three buys would be triggered?
The resent SHLX IPO seemed to have a questionable beginning. I subscribed to the offering quite early with a major brokerage firm. The prospectus then came out with a $19-21 target. Then it was announced the price would be $23. Then the units open at $32??. My broker told me that his firm received no allotment. Exactly who got units at $23. Apparently a lot of folks because all the units that were bought on opening day had to have sellers who must have “acquired” units at a much lower price. Otherwise why would the units have been sold the first day It would seem that there was an insider deal or some sort of nonsense from the underwriters who somehow profited from the deal. It appears that individual investors were hacked. Where is the SEC in this sort of questionable occurrence. Is there a logical explanation of this matter??
Robert Rapier
It was clear that there would be very strong demand for SHLX. So a lot of people who wanted units didn’t get an allocation. Given the level of demand, units will probably continue to climb, but on a fundamental basis they are overvalued right now. The projected yield has dropped below 2%, and investors are already factoring in a good chunk of future growth. We will certainly reevaluate, but I would put a limit order in at $29 and catch them on a potential correction. Otherwise I think you are overpaying based on the current fundamentals.
Stock Talk
Mark Hays
Robert I know you at one time held Westport WPRT in your portfolio. With the recent downturn what do you think about buying it? Seems like Cummins would perhaps acquire it?
Robert Rapier
That was always the thought; that there was enough value there that Cummins would buy them out. I still like the space, but Westport’s management made some moves that made me lose trust in them. Once I lose trust, I am done. I got out with a minimal loss, but it’s seen a very steep decline since. I sold around $25; I see it closed today at $6.75.
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Edward Getchell
Is the merger of OILT into EPD going to be tax neutral?
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Richard Smith
What do you think of CWEI as an investmnet?
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Don D.
Current oil pricing and OPEC starting to have a little discord within is now driving some crude prices down. How long do you see this fight continuing and in the upcoming earnings seasons do you see potential estimates for earnings cut from the drillers and hurting stock prices significantly example EOG, WLL? It seems some of the MLP’s are also feeling sympathy pains. For a short term move a few months would you lock in gains and reset pricing?
Robert Rapier
Don, I think the downside is pretty limited at this point. Prices could hang around at this level for a few months, but most oil companies have already become oversold in my opinion. I am a buyer right now of several companies, not a seller. We took profits on a number of holdings back in April, but some of those companies are starting to look very appealing again.
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Roger Masuda
In your October 22 Energy Strategist issue, you suggested buying into a stock “several installments over time.” I bought 1,000 shares of Emerald Oil yesterday. That was a very good call on your part since it is up 5.5% today. Assume that my goal for Emerald is to own 4,000 shares and that I will buy 3 more 1,000-share installments. What rules do you have as to when each of those additional three buys would be triggered?
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RCG
The resent SHLX IPO seemed to have a questionable beginning. I subscribed to the offering quite early with a major brokerage firm. The prospectus then came out with a $19-21 target. Then it was announced the price would be $23. Then the units open at $32??. My broker told me that his firm received no allotment. Exactly who got units at $23. Apparently a lot of folks because all the units that were bought on opening day had to have sellers who must have “acquired” units at a much lower price. Otherwise why would the units have been sold the first day It would seem that there was an insider deal or some sort of nonsense from the underwriters who somehow profited from the deal. It appears that individual investors were hacked. Where is the SEC in this sort of questionable occurrence. Is there a logical explanation of this matter??
Robert Rapier
It was clear that there would be very strong demand for SHLX. So a lot of people who wanted units didn’t get an allocation. Given the level of demand, units will probably continue to climb, but on a fundamental basis they are overvalued right now. The projected yield has dropped below 2%, and investors are already factoring in a good chunk of future growth. We will certainly reevaluate, but I would put a limit order in at $29 and catch them on a potential correction. Otherwise I think you are overpaying based on the current fundamentals.
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Peter
You mentioned that EOX had issued a convertible with a nominal yield of 2 %, maturing in 2019. Can a private investor buy it and if so, how?
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Peter
Today EOX published the latest quarterly report. Does it justify todays drop by currently more than 7%?
Peter
Sorry, seems that was a misinformation. Report doesn´t seem to have been published yet.
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