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Mark Bern, CFA  

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  • The Time To Hedge Is Now! March 2015 Update [View article]
    kg2931 - Thanks for commenting but please enlighten us as to how MU has changed so much that it will not react as it has in the past. I really would like to understand the basis for your statement. We all need to keep an open mind and I am always open to new perspectives.
    Mar 19, 2015. 05:46 PM | Likes Like |Link to Comment
  • QuickChat #278, February 5, 2015 [View instapost]
    jpau - Thanks for the link - enjoyed it much. But I do wish he had gone a little faster. That 10 sec breather was not necessary. Just kidding! LOL

    Not sure I agree completely on Google but definitely do on the others. But he does more research so it gives me something to think about.
    Mar 19, 2015. 01:08 PM | 2 Likes Like |Link to Comment
  • QuickChat #278, February 5, 2015 [View instapost]
    I saw someone saying that we are weeks away from oil storage capacity and the bottom falling out in oil prices. These guys are predicting $20/bbl oil! I guess I'll hang onto my USO puts. Happy days!
    Mar 19, 2015. 12:29 PM | 3 Likes Like |Link to Comment
  • QuickChat #278, February 5, 2015 [View instapost]
    I checked the overnight action and decided to stick with my position, too. Glad I did. Reminds me of a good day on the rides at Busch Gardens! Exhilarating!
    Mar 19, 2015. 12:27 PM | 3 Likes Like |Link to Comment
  • QuickChat #278, February 5, 2015 [View instapost]
    Agree, Maya. I timed it and it took me 21 secs to load the page. Of course, we are getting close to 1,000 comments. Maybe that's worth waiting for?!
    Mar 19, 2015. 12:32 AM | 3 Likes Like |Link to Comment
  • QuickChat #278, February 5, 2015 [View instapost]
    I only wish I had been so smart as WT. Still holding my position in EUO with a decent gain but will think about it overnight.
    Mar 18, 2015. 05:16 PM | 4 Likes Like |Link to Comment
  • QuickChat #278, February 5, 2015 [View instapost]
    Either there were no protesters injured or the media decided not to mention it. Lots of police injured is newsworthy. A lack of injuries to protesters is supposed to show us how a "civilized" country handles protesters? Something seems amiss to me.
    Mar 18, 2015. 01:44 PM | 4 Likes Like |Link to Comment
  • The Time To Hedge Is Now! March 2015 Update [View article]
    metal27 - You are right, of course. I said the inverse of what I was thinking. As the US$ rises against other currencies it just makes oil more expensive for those nations whose currency is weaker. A rising US$ is one of the factors keeping oil prices from falling further. If the US$ takes a breather I suspect oil prices will fall again.
    Mar 18, 2015. 01:31 PM | Likes Like |Link to Comment
  • QuickChat #278, February 5, 2015 [View instapost]
    I second the request for a new QC if it isn't too much trouble. It is even taking my computer quite a long time to load now. I've never experienced this before.
    Mar 18, 2015. 12:20 PM | 4 Likes Like |Link to Comment
  • The Time To Hedge Is Now! March 2015 Update [View article]
    metal27 - I am now focusing some research on three royalty trusts that produce primarily nat gas. I will eventually write an article about these (or at least my favorite) when I think most of the damage is done. My reasoning is that while the build of oil in storage continues it seems too soon to expect much positive price action in that area. With the first LNG exporting terminal coming on line later this year and two more between now and mid 2017 I believe that I can see the light at the end of the tunnel on nat gas prices. The bottom may already be in or we are getting very close. The exports should soak up much of the excess nat gas supplies and we should see nat gas prices in the US rise. Even though the mid-streams don't get hit as badly because revenues are not tied to prices, as part of the energy sector, they are still getting hit. I would argue that most of the downside in midstreams, including KMI, is being overdone and nothing to worry about in the longer term. Volumes will dip somewhat in a recession but the basic necessity of electricity and transportation will keep the midstreams from staying down.

    I don't feel the need to treat those positions differently since if a recession hits the Fed will undoubtedly come to the rescue with low interest rates (if it has the chance to raise them much first) and then investors will be looking for stable income plays. One of the first to emerge will be the midstream companies with long-term contracts and relatively fat dividends with ample cash flow. I expect them to be one of the first to bounce back. If we get much lower I'll be backing up the truck to load up.

    The bottom in oil prices is a little trickier to predict. The currency wars aren't helping either. As the US$ rises, of course, Oil (which is priced in US$) rises along with it. As the storage fills up here and abroad (which should happen by June at the latest at the current rate) the price of oil could drop even more. Frackers aren't going to start many new drilling projects except in the lowest cost plays, but they also won't halt projects already started. Those projects have been hedged (at least many have) out for two years on average at prices that should keep them from going under. All of the smaller E&P companies that don't hedge and are up to their eyeballs in debt will fold, but some other larger concerns will come in and buy up the assets for pennies on the dollar and keep the oil flowing. So, the drop in production will come in the shale plays, but it will be gradual rather than steep, imho. So, the problem of oversupply doesn't go away.

    Also, a deal with Iran could add another 1 mm bbl/d to supply in a matter of months. Thus, the oil price could stay down for a while. But as long as the oil flows through the pipes the midstream companies will do better than other parts of the energy sector. All that is to say that I do realize that the midstream companies could get hit some more, but I don't see how to predict by how much and don't expect it to last very long. All the while the dividends should be covered well so holding seems like the best thing to do. Hedging something that really hasn't lost its true value doesn't seem to me to be a good thing to do unless you buy puts on the weakest companies in the sector. I suppose it would make sense then to buy puts on the E&P companies with the highest debt-to-equity ratios and worst cash flows because those stocks will do much worse that the midstream stocks.

    I hope that helps. And thanks for making think my way through a response. Good question.
    Mar 18, 2015. 12:19 PM | Likes Like |Link to Comment
  • The Time To Hedge Is Now! March 2015 Update [View article]
    Please refer to Part X of the series where I describe in detail the rules I follow for my exit strategy. Here's the link: http://seekingalpha.co...
    Mar 18, 2015. 11:53 AM | Likes Like |Link to Comment
  • QuickChat #278, February 5, 2015 [View instapost]
    D-Inv, "API reported that gasoline stockpiles fell by 583,000 barrels, while distillate inventories fell 252,000 barrels."

    That only brings the total increase down to 9.7 for the week. But we'll see how the EIA calculates it.
    Mar 18, 2015. 10:13 AM | 4 Likes Like |Link to Comment
  • QuickChat #278, February 5, 2015 [View instapost]
    It should be interesting to compare the API storage report to the EIA report coming out tomorrow. API shows 10.5 mln bbl increase this week compared to consensus forecast of 3.7 mln bbl.

    http://on.mktw.net/1ML...)
    Mar 17, 2015. 08:21 PM | 4 Likes Like |Link to Comment
  • QuickChat #278, February 5, 2015 [View instapost]
    DG - I don't like the idea of investing in a country like Iran but this paragraph did stand out when I read it: "Gulf stock markets are likely to be relatively unaffected, although we could see some move in Dubai property as capital is repatriated to Iran. The Iranian stock exchange is a massive beneficiary at 10x the size of Nigeria and once SWIFT sanctions are removed, there are paths to invest in this at mid-single digit PEs and dividends in the teens, offering huge potential upside.."

    I think the author is right but it would be hard to pull the trigger for me.
    Mar 17, 2015. 05:57 PM | 3 Likes Like |Link to Comment
  • QuickChat #278, February 5, 2015 [View instapost]
    Maya - Totally agree and am trying my best to wait patiently for the big opportunity to come. I'm getting antsy but I know it will pay to wait. In the mean time I bought a few USO puts that are performing nicely so far. That helps calm me down on the patience thing.
    Mar 17, 2015. 05:29 PM | 4 Likes Like |Link to Comment
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