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Alexander J. Poulos

 
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  • Ensco PLC Offers A Sobering Look At The Dynamics Affecting Its Core Markets [View article]
    Ari,

    Thanks for the praise. Management is committed to their new builds so share repurchases are out for 2014. If the market plays out poorly in 2015 and the drillers continue to drift down, the prudent move would be to repurchase shares to help arrest the decline. I am not sure at this point it will be a 1-2 year stumble as that would imply a rebound in late 2015. A more likely scenario is late 2016-2017 time frame. As for the dividend, I would be very surprised if they reduced the dividend. That beings said, I do not have a position in the equity as this time as I find more compelling values elsewhere. Thanks for reading and commenting.
    Aug 20 10:06 PM | Likes Like |Link to Comment
  • Ensco PLC Offers A Sobering Look At The Dynamics Affecting Its Core Markets [View article]
    Jeffrey,

    Yes I would. A sell today doesn't mean I won't revisit the issue at some point in the future. Incidentally, I sold WAG in 2012 and have followed them since. I was glad to be able to get back in at an advantageous price. Lets see how the shake up in the industry plays out. Thanks for reading and commenting.
    Aug 20 10:02 PM | 1 Like Like |Link to Comment
  • Ensco PLC Offers A Sobering Look At The Dynamics Affecting Its Core Markets [View article]
    ckarabin,

    Time to limit losses here. The industry isn't getting better for a while whereas I can deploy capital into a very predictable industry (NYSE:WAG) at an attractive price. The trade off in my view is worth it. Thanks for reading and commenting.
    Aug 20 10:00 PM | Likes Like |Link to Comment
  • Ensco PLC Offers A Sobering Look At The Dynamics Affecting Its Core Markets [View article]
    Yikes, not exactly a positive for the industry.

    Petrobras (NYSE:PBR) plans to spend ~$154B during 2014-18 on Brazil's offshore pre-salt fields, but a budget increase of 4.9% from the 2013-17 budget - considering that budgets for 2012, 2013 and 2014 rose by a respective 8.7%, 13.3% and 10.8% - is a disappointment for U.S. companies operating there, analyst Lenny Zephirin says.
    The "monster rate" of $680K/day is coming to an end, as dayrates in Brazil fall in-line with PBR's capex budget, Zaephirin says, foreseeing rates in the mid-to-high $500K/day range for younger ultra-deepwater rigs and from $250K/day to the mid-$400K/day for older rigs, which depend heavily on rig specifications and contract length.
    The analyst has Sell ratings for Seadrill (NYSE:SDRL), Ensco (NYSE:ESV), Diamond Offshore (NYSE:DO) and Transocean (NYSE:RIG) - four of the top five companies with the highest backlogs working for Petrobras.
    Aug 19 08:39 PM | Likes Like |Link to Comment
  • Ensco PLC Offers A Sobering Look At The Dynamics Affecting Its Core Markets [View article]
    2bears,

    The speculators that ordered new drilling equiptment that aren't actually in the field today. See the CEO's comments above in the article for reference. Bankruptcy certainly doesn't apply for ESV just weaker earnings.
    Aug 19 07:21 PM | Likes Like |Link to Comment
  • Ensco PLC Offers A Sobering Look At The Dynamics Affecting Its Core Markets [View article]
    Aids patient,

    Go on the companies website and review their financials for the past decade. A fabulously well run company in the auto insurance business primarily in the UK. It is a cap gain with a generous dividend play. Admiral Group PLC is the low cost provider in the UK similar to Geico here. They pay out the excess capital to shareholders in the form of dividends twice a year. This year's payout is above 7%. 
    Aug 19 03:52 PM | Likes Like |Link to Comment
  • Ensco PLC Offers A Sobering Look At The Dynamics Affecting Its Core Markets [View article]
    jaxgrab,

    Fair enough, thanks for reading and commenting.
    Aug 19 02:26 PM | Likes Like |Link to Comment
  • Ensco PLC Offers A Sobering Look At The Dynamics Affecting Its Core Markets [View article]
    Skidrow,

    Take a look at the fleet status report, most of the contracts run out in 2015 right when the glut of products hits the market. Do you really think the oil majors will pay more? Don't be surprised if they negotiate price decreases which will effect earnings. Thanks for reading and commenting.
    Aug 19 02:26 PM | Likes Like |Link to Comment
  • Ensco PLC Offers A Sobering Look At The Dynamics Affecting Its Core Markets [View article]
    njbrother,

    We shall see in a year if I was indeed to impatient. Thanks for reading and commenting.
    Aug 19 02:20 PM | Likes Like |Link to Comment
  • Ensco PLC Offers A Sobering Look At The Dynamics Affecting Its Core Markets [View article]
    31October,

    ESV will certainly not go bankrupt, the shares could fall much further though.
    Aug 19 02:19 PM | 1 Like Like |Link to Comment
  • Ensco PLC Offers A Sobering Look At The Dynamics Affecting Its Core Markets [View article]
    vireoman,

    Exactly, I suspect lower prices will be had as the bankruptcy of the speculators plays out. Thanks for reading and commenting.
    Aug 19 02:18 PM | Likes Like |Link to Comment
  • Ensco PLC Offers A Sobering Look At The Dynamics Affecting Its Core Markets [View article]
    Pedro,

    I disagreed here on point one. ESV was able to consistently get work for their older rigs. The move to discontinue them is a sign of weak demand that didn't exist 6 months ago. Think about it, if demand were there why not keep the older rigs active while awaiting the new builds in 2015. Instead they will be cold stacked while awaiting a pending sale. Furthermore on the sale issue I suspect they will find the market very unreceptive here.

    2016 may prove to be an optimistic number, it depends on the bankruptcy of the weaker hands. If it takes a while it will depress the overall dynamics of the industry. Management was quite sanguine on the CC when asked about purchasing some of the soon to be distressed rigs. They were cool to the idea due to the uncertainties of how they were designed, constructed etc. Perhaps if the price is low enough it will be worth it.

    The key for investors here is what other opportunities are you giving up while waiting for the change in the industry that very well maybe 2-3 years out. For myself the answer was to move on, for others the answer maybe to sit tight and wait. If I am correct and the industry is under pressure for the next couple of years a more attractive price will appear. Thanks for the comment , I enjoyed it.
    Aug 19 02:16 PM | 1 Like Like |Link to Comment
  • Ensco PLC Offers A Sobering Look At The Dynamics Affecting Its Core Markets [View article]
    Timmies,

    The near term (next 2 years) is what caused me to reconsider here. The story failed to play out as I suspected. I pondered the move for a few days and just wasn't comfortable holding the shares. WAG fell precipitously on August 6th in what I believe to be a market overreaction. My projection for WAG over the next 10 quarters is much higher than ESV especially in light of the recent conference call. The projected gain from WAG more than offsets the loss in ESV, making it a relatively easy decision to make.

    http://seekingalpha.co... Take a look at this article, I laid out my thesis for WAG. WAG is easily predictable with a recession resistant business (healthcare) that will continue to grow well into the future. Don't be surprised here when management beats the earnings targets they laid out. I based my assumptions on the low end of their range which in my view is conservative. Mr Pessina has a history of under promising and over delivering. Thanks for reading and commenting.
    Aug 18 08:13 PM | 1 Like Like |Link to Comment
  • Deere & Co: Plowing Along [View article]
    Investing Doc,

    Interesting piece on DE, a company I have been watching for a while. I have used DCF constructs such as the one you modeled and have found them to be a bit unreliable especially with cyclical plays such as this. Reviewing DE price action since 1997 my takeaway is as follows.

    The cycle for earnings declines takes 5 years from peak earnings until DE surpasses them again. Peak earnings were in 2013 with declines projected for this year and next. If I had to venture a guess, the opportune time to enter into a long term position is the summer of next year. I will continue to watch the company closely and like yourself would like to purchase shares at less than $80 per share. Thanks for the article, I enjoyed it.
    Aug 18 06:52 PM | Likes Like |Link to Comment
  • Ensco PLC Offers A Sobering Look At The Dynamics Affecting Its Core Markets [View article]
    Bull Feeder,

    The dividend will more than likely be secured. That being said I suspect if there is a glut of supply and a price war breaks out earnings may crash to the $3 ish level which would put significant downward pressure on the shares.

    I fear my capital not the dividend. Take a look around, quite a few of the high yielding plays have traded lower this year making their dividend look even bigger. Notice how the dividend yield didn't arrest their price decline. If you are looking for a low risk high dividend play take a long look at T and AMIGY. Far less risk here for a similar yield. Thanks for reading and commenting.
    Aug 18 06:01 PM | Likes Like |Link to Comment
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