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Alexander J. Poulos  

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  • Blood In The Water - Time To Buy BP Prudhoe Bay Royalty Trust [View article]
    Bill,

    Tough to tell, the holders of BPT became "spooked" and decided to sell out. From my view, it seems like an overreaction similar to what we have seen in the past. My suspicion is the selling pressure is done and we will see the shares recover most of the ground lost. At minimum a low risk trade able entry is at hand. Others are free to debate the merits of the trust via lifespan, chargeable costs etc.
    Feb 26, 2015. 10:55 PM | Likes Like |Link to Comment
  • Blood In The Water - Time To Buy BP Prudhoe Bay Royalty Trust [View article]
    john,

    I made a similar argument with a prudent investor, read his articles and some of his comment streams for a more accurate reflection . In my opinion, you can't model the trust very well. Keep in mind the trust termination may very well be off by more than a decade which changes the picture. Watch the production levels for a clue as to the underlying health of the field.
    Feb 26, 2015. 07:26 PM | Likes Like |Link to Comment
  • Blood In The Water - Time To Buy BP Prudhoe Bay Royalty Trust [View article]
    john,

    Careful, I have been following this name for quite a few years now. Lets keep in mind the termination date is a guess and is dependent on production levels, the cost of production and the underlying price of crude. Production levels have increased a bit, the 2022 termination date very well maybe pushed out yet again. On the subject of dividends, again good luck trying to predict the actual price of oil going forward. The vast majority missed the current led down in crude much as I suspect most will miss the next leg up. I purposely shied away from including a DCF due to what I feel the impossibility of adequate modeling. Model too low and you come up with a very low number, to aggressive and its very high. In my view the best way of measuring this is through "trough" dividends as production levels remain quite similar. At the low 60's I view the risk reward as favorable, in the mid 80's not so much. Thanks for reading and commenting.
    Feb 26, 2015. 06:37 PM | Likes Like |Link to Comment
  • Blood In The Water - Time To Buy BP Prudhoe Bay Royalty Trust [View article]
    Fear,

    We share similar thoughts on the subject of oil. I was loath to add exposure in December as I was not yet convinced the bottom is in place. Yet with all the bad news thrown at the sector, crude has held the $50 handle and the share price of most companies are up for the year. BPT trades very much in line with oil, today's sell-off is a great way of "turning back the clock" to say late December and taking a position. Lets see how the story plays out, thanks for reading and commenting.
    Feb 26, 2015. 06:29 PM | Likes Like |Link to Comment
  • Blood In The Water - Time To Buy BP Prudhoe Bay Royalty Trust [View article]
    FA,

    I will give you my opinion, the ultimate proof will be known a few years from now. The height of panic selling should have been in December as those with losses sold to write off on taxes. The entire sector sold off quite heavily then, it would intuitively make sense for BPT to bottom along with the industry as well.

    BPT has been prone to bear raids in the past causing exaggerated spikes down in the share price. You will see a sharp spike in volume in 2012 when a negative piece came out on BPT. You can profitably trade one the big exaggerated down moves on BPT similar to other securities. I suspect today's down spike is an opportunity. As for the longer term viability of the trust, it depends on the price of oil which nobody can model accurately along with tax rates and chargeable cost adjustments based on the rate of inflation. Being that the CPI has posted negative results the last couple of months, I guess it is theoretically possible for the chargeable costs formula to be adjusted downwards. Many though the tax rate would sink the trust yet that was change as well. We shall see how this turns out, for now my money is on this is a trade able bottom. What are your thoughts?
    Feb 26, 2015. 05:57 PM | Likes Like |Link to Comment
  • Updating My Price Target On Gilead Sciences [View article]
    SRB,

    I decided to adjust the model based on managements expectations. I certainly wouldn't be disappointed if revenues came in higher. I prefer to be surprised on the "upside" than with modeling too aggressive which leads to needless losses. Thanks gain for reading and commenting.
    Feb 26, 2015. 05:25 PM | 1 Like Like |Link to Comment
  • Blood In The Water - Time To Buy BP Prudhoe Bay Royalty Trust [View article]
    F Accountant and Fair value,

    The answer is we have seen a panic in the shares of BPT which historically has lead to nice short term gains. The oil plays are all expensive here. Take a look at the chart, you have major panic selling here, I wouldn't at all be surprised if we see the selling reverse in short order. Thanks for reading and commenting.
    Feb 26, 2015. 05:22 PM | Likes Like |Link to Comment
  • Blood In The Water - Time To Buy BP Prudhoe Bay Royalty Trust [View article]
    n,

    The shares are deeply oversold, RSI hit 30 today. Take a look at a one year chart you will see the shares sold off quite heavy right at the end of the year yet the volume was roughly 745k with and RSI of 20. Today we got double the volume yet traded comfortably above the lows in December. I believe today's sell-off was a major overreaction that the market will correct in a few days. Why not profit from the panic selling?
    Feb 26, 2015. 05:17 PM | Likes Like |Link to Comment
  • Blood In The Water - Time To Buy BP Prudhoe Bay Royalty Trust [View article]
    Seatle,

    The shares hit $69 intra day and I was dancing. Sorry for the delay, I nearly fell out of my chair this morning when I saw what was happening with BPT. I am looking for the equity to trade back in the 70's in very short order. Thanks for reading and commenting.
    Feb 26, 2015. 05:10 PM | Likes Like |Link to Comment
  • Blood In The Water - Time To Buy BP Prudhoe Bay Royalty Trust [View article]
    chinaren,

    “Royalty Production” for each day in a calendar quarter is 16.4246% of the first 90,000 barrels of the actual average daily net production of oil and condensate for the quarter from the proved reserves allocated to the Trust. During periods when BP Alaska’s average daily net production from those reserves exceeds 90,000 barrels, the principal factors affecting the Trust’s revenues and distributions to Unit holders are changes in WTI Prices, scheduled annual increases in Chargeable Costs, changes in the Consumer Price Index and changes in Production Taxes.

    A couple of examples, June 104 WTI average price $103 chargeable costs 16.90 cost adjustment 1.832 adjustment 30.96, taxes of 19.28 per barrel leaving a profit of 52.83 per barrel with a production level of 82.3.

    Lets compare it with Jan 2013 WTI of 88.15, chargeable cost 16.70 cost adjustment 1.773 netting a 29.60 total adjustment, taxes 21.37 leaving a profit of 37.18 with production of 92.6 million barrels.

    Notice even though the net production costs went up roughly $1 per barrel, the drop in the tax rate offset the loss.

    Going forward, unless the price of WTI meaningfully rebounds above $50 distributions will be miniscule at best. Again the key is the price of oil, if it begins to head north the trust is quite profitable. Lets see what happens. Thanks for reading and commenting.
    Feb 26, 2015. 05:05 PM | 1 Like Like |Link to Comment
  • Blood In The Water - Time To Buy BP Prudhoe Bay Royalty Trust [View article]
    Anuj,

    What makes BPT so difficult to model is the production levels of the trust and the price of WTI oil. The use of 2009 distributions was intentional as it was the low point of the recent energy cycle. Many worried the taxes imposed by Alaska would eat into revenue yet as we recently witnessed the tax rate became more favorable to spur additional exploration. In my view, as long as production levels remain above 90k the current issues namely the low WTI prices will work themselves out over the course of the year and the security will readjust upwards. As much as I agreed with your thesis to short when you posted it, the trust price is now appealing. Thanks for reading and commenting.
    Feb 26, 2015. 04:47 PM | 1 Like Like |Link to Comment
  • Blood In The Water - Time To Buy BP Prudhoe Bay Royalty Trust [View article]
    peter,

    Thanks, lets see if the trust recovers over the next few trading days.
    Feb 26, 2015. 04:31 PM | Likes Like |Link to Comment
  • Why Did McDonald's Rally Yesterday? [View article]
    Aaron,

    If I may add to your selling point, the bulk of investors long term gains comes from buying what I would term "special" companies and simply holding and reinvesting the dividend. Special companies is defined as a company with a dominant position in an industry that makes it virtually impossible to displace. MCD is a great example of what I would term a special company. As Buyandhold2012 will attest to, the long term performance especially with dividends reinvesting is nothing short of spectacular. Watch, new CEO comes new momentum a streamlined menu and increased service times which should lead to better operating results.
    Feb 26, 2015. 02:48 PM | 1 Like Like |Link to Comment
  • Why Did McDonald's Rally Yesterday? [View article]
    peapaw,

    That would me I, check my archive. I turned bullish on MCD since July. A bit of patience is all that is needed as events are starting to turn MCD's way. If it takes out it;s old high, expect a quick sprint to $115 my published target price. The restaurant industry has lost of momentum behind it, the odds are good we will see $115.
    Feb 26, 2015. 02:41 PM | 1 Like Like |Link to Comment
  • Why Did McDonald's Rally Yesterday? [View article]
    Ari,

    Excellent observations. MCD is the dominate player in the restaurant space, no other entity is even close. The company has been mismanaged by Mr. Thompson a move the board has corrected. I modeling just how MCD was in August, http://seekingalpha.co... stating "The final question becomes what sort of discount we should apply to the model's projections. I will use a 20% discount, which will net out a fair value of roughly $113 per share which I will use for my target price by the conclusion of 2015. At its current rate of $94.45 per share, a current investor in MCD can reasonably expect a total return of $18.55 per share in capital gains, along with an additional $3.43 worth of dividends. The total overall gain I am targeting is 23.27%, which is highly satisfactory for such a low-risk play as MCD. I would like to mention the valuation model uses a stagnant share count in figuring its model price, which will be proven to be on the conservative side."

    I sauspect the shares are beginning there ascent towards my price target. Once the new CEO takes over, we will get a renewed sense of excitement similar to what is seen in TGT. Once the shares break $104 its off to the races.

    The market will periodically mark down a superior company as they fret over short term events. For the conservative, long term investor these "tantrums" provide an excellent opportunity to enter into one of these companies at a stellar price. Once in you can simply sit back, set the dividend to reinvest and enjoy the wonders of compounding. Welcome aboard Ari, and thanks again for the article.
    Feb 26, 2015. 09:37 AM | 9 Likes Like |Link to Comment
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