ConocoPhillips: Grit Your Teeth and Sell

The stock price of ConocoPhillips (COP) ($87) has risen to a level at which we think some money has to be taken off the table. Accordingly, we are selling 20% of our position.

We know, we know--how many times have we said ‘don’t sell your oil stocks’? Certainly, the recent strength in oil and oil stocks argues against such a move at this time. But our Price Disciplines were designed for the explicit purpose of forcing us to take counterintuitive investment action at emotional extremes; in other words, to take profits when we are least inclined to do so--and that would be now for the oil stocks.

Under normal circumstances we would mean would sell 50% of our COP holding; so we are compromising with ourselves by selling 20% today with the intent of averaging out of the other 30% at higher prices.

EPS: 2006 $9/99, 2007 $8.65, 2008 $8.55
DVD: $1.84
YLD 2.1%

Disclosure: The author has a position in COP.

COP 1-yr chart:

Comments

[yourfilled:]

Oil making new highs, the Mid East in a mess, energy worth more than Gold and you are selling.
I plan to stay long, thank you. Sell homebuilers, but not OIL>

2007 Jul 19 09:09 AM

[yourfilled:]

Oil making new highs, the Mid East in a mess, energy worth more than Gold and you are selling.
I plan to stay long, thank you. Sell homebuilers, but not OIL>

2007 Jul 19 09:09 AM

[kpr:]

COP is a nat gas play, not oil...good advice Steve

2007 Jul 19 10:02 AM

[Mmarrkk:]

Check again...COP makes about 50% of its profit from oil production and oil refining. About 50% in natural gas. these are very rough figures but directionally correct. DEFINETLY NOT a pure natural gas play. Look at their reserves; no where near dominated by natural gas.

2007 Jul 19 01:22 PM

[cgibson911:]

Oil at $80 and COP at $90....until then, I'm long

Chuck
Maryland

2007 Jul 19 12:15 PM

[john gaats:]

What do you do when you sell the energy stocks? You can save it in a lock box and sleep really well. Or you could buy some other stocks that are not artificially depressed.

2007 Jul 20 01:18 PM