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Chris Sandys

 
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  • Oil Forecast For 2015 Based On A Predictive Algorithm [View article]
    It has a lot to do with OPEC. When the Saudis took the action to no longer support the cartel, they allowed the market to set the price without the interference of a cartel limiting supply. It also has a lot to do with increased supply, for which we can thank fracking in the United States.

    The greatest beneficiaries of this are the lower income consumers, of whom fuel costs are a significant portion of their mandatory spending. But they are not the only ones that benefit from increased supply and true price discovery. All consumers benefit from the lower cost of the commodity.

    There are only a few special interest groups, with conflicts of interest, that would call this "reckless." (1) Anti-oil environmentalists, who are in abject denial on the extreme demand inelasticity of petroleum, i.e. people do not purchase more or less due to price. (2) Sovereignties that require a high price of oil to finance their state operations. (3) Petroleum E&P laborers.
    Jan 6, 2015. 11:59 AM | 3 Likes Like |Link to Comment
  • Awilco Drilling: A Whopping 39.1% In Dividend. What Is The Catch? [View article]
    Thanks, User 9. Someone else mentioned this article elsewhere on SA today:

    http://bit.ly/1z2r7eM

    This is from an institutional investor that is long Awilco. He projects about a 15 years until the rigs are obsolete.

    He also does an interesting analysis where he projects the impact of a 50% decrease in dayrates. But presumes that they are getting contracts. A real risk, as is highlighted in one of the comments, is that the dayrates go to $0, i.e. they cannot secure contracts. That would put the ROR into the negative territory. I know it has been disputed in this conversation, but they believe there is a real danger that rigs will compete down for business.

    In the meantime, I waiting for $50/bbl on crude.

    For all the longs holding strong, I wish you well. I may be missing a buying opportunity by not entering here, but the risk of a negative return is not insignificant.
    Dec 10, 2014. 11:20 AM | 1 Like Like |Link to Comment
  • Awilco Drilling: A Whopping 39.1% In Dividend. What Is The Catch? [View article]
    Thank you for you input, Covingtonium. I have no reason to not believe the hulls of the semi-submersible rigs could last a long time. My question is, when will they no longer be in demand? That is, not what is their physical lifespan, but their market lifespan?

    I'm not an expert in this area, but I think there are a few on this thread.
    Dec 9, 2014. 11:11 PM | Likes Like |Link to Comment
  • Awilco Drilling: A Whopping 39.1% In Dividend. What Is The Catch? [View article]
    I'm not so sure your assessment is correct, sts66.

    Are you saying that these two rigs have an infinite service life? Surely they will be scrap metal one day?

    I am unconvinced that this is not a depleting asset.
    Dec 9, 2014. 09:11 PM | Likes Like |Link to Comment
  • Awilco Drilling: A Whopping 39.1% In Dividend. What Is The Catch? [View article]
    I'm still trying to get my arms around this investment.

    Is it fair to describe it as a depleting asset, where every distribution is essentially a return of capital? This return has the potential to continue to X point in the future, at which point the asset is spent, and is no longer able to generate revenue?
    Dec 9, 2014. 06:52 PM | Likes Like |Link to Comment
  • Oil Price Slide - No Good Way Out [View article]
    Petroleum can still be extracted profitably at these more reasonable prices. Even expensive extraction, like hydraulic stimulation in shale. So that is not an issue, not in the least. The so-called "problem" in this context is that despotic governments around the world will be unable to finance their largess.

    Maybe with all the money the US Consumer is saving on gasoline, we could all send money to Iran and Venezuela to help with this "problem."
    Dec 8, 2014. 01:14 PM | 2 Likes Like |Link to Comment
  • Update: Awilco Earnings [View article]
    "So far" was the operative phrase.

    Down an additional 40% over the last 3 months.

    People loved it $25.
    It was the BUY Opportunity of a lifetime at $18.

    What is being called at $11?
    Dec 8, 2014. 12:00 PM | 2 Likes Like |Link to Comment
  • Awilco Drilling: A Whopping 39.1% In Dividend. What Is The Catch? [View article]
    "And if oil prices are still in the $50/barrel range 2 1/2 years from now, there will be a lot bigger problems in the world at large..."

    It really depends what would be driving the lower cost: Abundant supply or depressed demand, i.e. economic slow down. Right now the wonderful experience of low petro prices is from supply.

    In that case, everyone wins, with the potential exceptions of Awilco and RIG.

    So what happens if they are unable to secure contracts for 1 or both of their rigs? Does this company trade-down to junk-metal salvage price? It has no value beyond that, does it?

    Not trying to be contentious, I'm just trying to understand the risk here, which on the surface level seems magnificent.
    Dec 8, 2014. 11:23 AM | Likes Like |Link to Comment
  • Oxford Lane Capital Gets Company In 'Retail CLO' Space, With Launch Of Eagle Point Credit [View article]
    Good point Downtown Investment Advisory. 15% returns is indicative of equity risk. SPY over the past 20 years has an average annual return just north of 16%.

    With more conservative investors, a strategy I will use with this investment (OXLC) is to clip the coupon, and investment it Market-Linked CDs. It's a nice way to take the earnings, put them in an ultra-safe investment, and continually manage the risk down.
    Oct 28, 2014. 07:05 PM | Likes Like |Link to Comment
  • Oxford Lane Capital Gets Company In 'Retail CLO' Space, With Launch Of Eagle Point Credit [View article]
    It will be interesting to see the distribution schedule (quarterly or monthly), their reinvestment policy/plan, and of course the yield.

    Good article - Thanks.
    Oct 25, 2014. 11:32 AM | Likes Like |Link to Comment
  • Oxford Lane Capital Corp. Is Paying Double-Digit Yields [View article]
    The ticker for the Preferred Stock is OXLCP. Currently yielding 8.25% annually, pays monthly.

    If you want to sleep very soundly at night, OXLC will have to stop paying all distributions before it can touch the dividend on OXLCP.

    Not bad for 8.25%.
    Aug 7, 2014. 11:07 AM | Likes Like |Link to Comment
  • Ready For A Rebound? Gilead's $1000 Pill [View article]
    Their are two angles to the geographic cost variance. On one hand, yes, drugs are cheaper in countries that are economically less developed or that employ price controls. On the other hand, developed countries get access to essentially-free labor via imported merchandise.

    View it this way: You are keeping your workers healthy.
    Apr 22, 2014. 10:10 AM | 1 Like Like |Link to Comment
  • Ready For A Rebound? Gilead's $1000 Pill [View article]
    Help me with my math here. Is this correct?

    Estimated 3 million cases of chronic Hep C in the US alone.
    3 million times $84k is >$250 Billion.
    That is the US alone. And unless this can be eradicated globally, there will unfortunately be new customers.

    From the CDC:

    http://1.usa.gov/1lkM6Ww
    Apr 19, 2014. 12:11 PM | Likes Like |Link to Comment
  • Ready For A Rebound? Gilead's $1000 Pill [View article]
    Thank you for sharing, Russ (sourdo).

    Largely we're about looking for market gains here, but it is also tremendous to hear about the human elements of these technologies.

    I wish you well.
    Apr 19, 2014. 12:16 AM | Likes Like |Link to Comment
  • Oxford Lane Capital's Holiday Surprise: 9% Dividend Increase Plus Bonus Payment [View article]
    Mr Mom,

    Steven had a very accurate and correct explanation of what the equity tranche is, but I'm not sure where you are on the learning curve at this moment. (No offense implied to either Steven or Mr. Mom).

    Here is how I explain the equity tranche to people who are still getting comfortable with the concept of a CLO. Think of a CLO as a company. The equity tranche is the "owner" of the CLO, just as shareholders are the owners (equity) of a company. Before owners can take profits, they must pay their bond holders (superior tranches of a CLO). In the case of a CLO, every tranche has a prioritized payment to the equity tranche. Since the other tranches have a prioritized payment, they yield less. Just like a company's bonds have less profit potential than its equity. Also, any unrecoverable losses are not born by the creditors (superior tranches), but the shareholders (equity tranche).

    I used to trade mortgage securities (CMOs), and I know fully well how confusing these concepts are at first. I hope these examples help ease you into understanding.
    Mar 20, 2014. 09:16 PM | 3 Likes Like |Link to Comment
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