Lior Cohen

Utilities, gold & precious metals, oil & gas, commodities
Lior Cohen
Utilities, gold & precious metals, oil & gas, commodities
Contributor since: 2012
I don't think they are going under yet only that there is a higher chance than there was before this news broke.
I talked in length about oil and copper in the past. Here are just two of the recent articles on these commodities.
But in the end of the day, sure, it's a matter of opinion where oil/copper are heading.
Thanks for your comments. I agree that a lot of articles are just riding the trends. I also don't think I was too harsh on RDS only tried to point out the good and bad in a balanced way -- as much as possible. I also plan to stock up on RDS if shares start falling again. Finally, looking into history could be misleading at times. The fundamentals in the oil market have changed so it's not 2008/9 all over again. That's why oil prices could remain this low for a while -- a long while.
How BG will play out is a key issue, but let's first see that the deal follows through.
I talked about debt burden -- a balance sheet term -- and not cash flow.
In the context of current market volatility I wouldn't be surprised to see Vale reaching $2 in the near term. But again, my guess is as good as yours.
Let me clarify: I don't think RDS will cut its dividend this year, but 2017 isn't off the table if oil prices remain low by the end of 2016.
Thanks for spotting the error. It should be 14/18. Made the correction. By the way, 14/21 or 66% refers to the times when the NFP headline figures were lower than expected and SLV prices increased on the day the NFP report was published.
Haleiwahu: Thank you for your comment and kind words. It seems better to have deals such as Yauliyacu than some of the deals SLW made in recent years.
Thanks Smitty for your kind words.
A wise advice that very few follow...
Thanks Rose. About the dividend, perhaps in the Q4 earnings call the CEO will address this issue. CMI does seem low but it too suffers from the same market conditions as CAT and DE...
Thank you for the kind words.
Thanks for your comment. The company, as I said, done well in cutting its AISC. And if it reach its annual guidance it will be among the lowest. You are spot on about the maturity, but it's not a matter of cash flow and more about investors being conservative. If you think gold prices rally (I'm still on the fence about that), IMHO other gold producers, as the ones listed above, may do better than ABX.
Thanks for point this out. I've corrected this passage.
The deficit it "covered" by silver stocks including scrap supply. For more see here
And here
About the data from Silver Institute, as with any source, should be take with a grain of salt. But they are the only outlet that provide extensive and free data on the silver market.
Thanks for your comment. You are right: a long position, even for a short period, is a gamble at this point with this stock.
Perhaps another, albeit also highly speculative, play on LINE, for those who work with options, would be a position on the volatility of the stock with strategies such as Long Straddle
But I haven't performed these strategies -- only learned them. So take this route with a pinch of salt.
That's a tough call at this point to see how low can it go. If oil prices remain very low in H2 2016, the stock I wouldn't be surprise to see the stock fall below $0.5 (but my guess is as good is yours). Keep in mind, at this point the stock is mostly a highly speculative asset given its low market cap, its high debt and oil hedges that expire at the end of 2016 (even though it will still have hedges on NG, as one SA members pointed out in the discussion below).
Thanks for your comment. You are right that Clay Williams did point out that they want to shift their attention from buybacks to M&A. But it will remain to be seen how it will actually be implemented.
Thanks for your feedback -- will keep that in mind about acronyms. And the result could vary that's why I labeled this as a back of the envelope calculation that should give a sense of where the company's operating cash flow is heading, given what we know.
I have done A LOT of valuations in my day (I also worked in my past in a consulting firm and done many valuations for them) and I found that rough estimates are a "good enough" estimates compared to the "accurate models" that you will spend days to compute and for the most part won't yield a much different number.
Regarding discount rate, I think 8%-10% is reasonable, but again it's an assumption. For the industry it's around 8.5% and a quick search in SA also found a more "accurate" calculation that it should be around the range I mentioned.
Regarding growth: Again, yes I could have gone with higher growth but it won't account, due to the simple model, for the expected drop in margins. So again, think of this valuation, if you are a bull, as a floor value for people who aren't so bullish on the stock.
Thanks for the feedback. Again, I only intended to provide a simple valuation. I didn't lay out all the assumptions to avoid being overbearing. 3% may be low for some or not low enough (I used it for 2017 as terminal -- I also tried an 6% growth in 2017-2020 and terminal as afterwards and got a price of $58 -- so a gain of $6) . After all:
"Chief Executive Officer Jim Hughes sees total demand in the U.S declining in 2017 after the tax credit expires. He expects to sell about 3 gigawatts of panels that year, about the same as in 2016"
And keep in mind that in 2016 OP will be even lower than it is in 2015. So revenue goes up, but margins also shrink. And shipments are expected to rise next year by only 3.5%. So the trade-off -- rising revenue but falling margins -- could keep profits from rising, as is the case for 2016.
Expanding the range is a good idea, maybe next time, but also keep in mind that providing too high of range will lose the meaning of a valuation.
You are right about the assumptions, that's why I did a sensitivity analysis. I could have expanded the table. But this table is only to show the range around the current price. For 10%, it's likely to add, given the above assumptions, another $70+ to the stock price so it will bring it to over $120.
Thank you for your comment.
It's still important to focus on the whole private sector. But even so, ave. weekly hours hasn't moved much in recent months and as of last month even inched down.
So far, ave. weekly earnings are still up by 2% as of November. And you are right that if the total amount in the pocket does rise -- by either higher wages or more hours -- people aren't likely to see a bigger paycheck or spend more.
Thank you for your comment -- you made a fair point. I will only add that DE's cash flow still shows that at least last FY the OPC wasn't enough to cover the shares repurchase +dividend pay. And given the current outlook , this could be, yet again, the case for next year. So the company could still afford this strategy, but, down the line, this may not be the right course given the expected market changes.
I have checked the relation of CHK and NG: The relation has also intensified in recent months -- similar trend but the correlations are weaker than the ones CHK have with oil. So, NG prices do matter, but oil, at least for investors, seems to matter much more.
I haven't checked for all oil companies -- but so far for BP (I'm long on BP) has an actual different trend. My guess this is a more common trend (stronger relation to oil in recent months) with companies that have high debt.
Thanks for your comment. I agree about the unemployment rate and talked about it in the past. But the general direction has been positive for the labor market in both wages and employment. And while the income elasticity of demand for tobacco is likely to be low, an improved labor market will still raise the demand for cigarettes, mainly among young people, and vice versa.
Thanks. You are right. The merger will be good for MO investors as also suggested by this article
Thanks for correction. Rectified.
Thanks for your kind words, much appreciated. You are spot on about low margins in Q4. The spike in VLO does seem a matter of (a bit overly?) optimistic outlook for VLO due, in part, to the recent slide in oil prices, expected weakness in the oil market in 2016 and higher margins in the subsequent quarters.
Thanks for the correction. I meant sales not market share -- it was rectified.