Lessons Learned From Our 3 Worst Performing Stocks Of 2014
- Unforeseen oil price declines late in 2014 caused heavy stock price losses in Lightstream Resources and SeaDrill Limited.
- The imperfect storm of unfavorable election results, a falling Brazilian Real, and unfavorable regulation took a heavy toll on the stock price of Companhia de Saneamento.
- Lessons learned include debt and commodities don’t mix; even the most conservative investment in an emerging market can lead to significant losses.
Our 3 Best Performing Stocks Of 2014
- Neurocrine Biosciences Inc. rose 134% last year and still has more to go in 2015.
- ACCO Brands Corp. makes an interesting small cap value stock at lower prices.
- Microsoft Corp. will likely consolidate last year’s gains in 2015, but should be accumulated on weakness.
These 2015 Predictions Could Be Vital For Your Wealth
- 2015 will mark a major turning point in the market from liquidity driven to earnings driven.
- Oil prices could fall to $30 per barrel in the first quarter of 2015; buying opportunity for EOG, DVN, OXY.
- Second quarter Fed will likely raise rates to 0.50%; economic numbers should be strong.
- Third and fourth economic numbers will likely be weaker than most expect as oil hedges roll over.
- Opportunity in domestic retailers, transportation, and oil and gas bottom fishers on commodity weakness.
KVB Capital LLC's Best And Worst Third-Quarter Performers
- At KVB Capital LLC, every quarter we highlight our best and worst performers for the quarter.
- Our best performers were Gilead Sciences Inc. (GILD), Nokia Corporation (NOK), Neurocrine Biosciences, Inc. (NBIX).
- Our worst performers were Lightstream Resources Ltd (LSTMF), Devon Energy Corporation (DVN), EOG Resources, Inc. (EOG) and SeaDrill Limited (SDRL).
- These stocks are part of a 40 stock model portfolio and are also owned by most of our clients.
Is The 10.7% Dividend Safe For Lightstream Resources? What Is The Downside Risk?
- During the last 10 to 40 years of a shale well’s life, production in the Bakken declines between 5% to 10% per year.
- If Lightstream stopped all exploration and focused only on paying the existing dividend, how long could the existing dividend be maintained based on 2Q 2014 production?
- Case I, doomsday scenario, where oil prices and production drop by 10% per year; even with extreme assumptions the dividend is safe.
- Case III demonstrates a conservative scenario where prices stay flat for the next 10 years and production drops by 5% per year, showing Lightstream should not be below C9.11.
- If the company uses excess funds to successfully grow, then Lightstream could trade much higher because 70% to 90% production occurs the first year in shale plays.
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