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Ray Merola  

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  • EOG Resources 2015: Growth On Hold, But Cash Flow Covers Capex [View article]
    Very nice article, Callum

    It's clear, factual and to-the-point. EOG is a fine domestic producer with the best balance sheet in the independent E&P space. I did a bit of rough math based upon the conference call comments and conjured up 2015 EPS at ~$2.84 and OCF at $9 per share: based upon $45 bbl oil. Pretty dire.

    Hydrocarbon prices have a propensity to overshoot, then over-correct. If this is the case, patient EOG shareholders will do just fine. I do not plan to trade EOG stock: just own it.
    Feb 21, 2015. 05:28 PM | 2 Likes Like |Link to Comment
  • A Dissolving Overhang Marks General Motors A 2015 Top Choice [View article]
    I don't have much feel for how things would play out if GM loses the bankruptcy shield. Old cars depreciate; so how does one figure out what a car would have been worth if no ignition-switch problem occurred? How much additional economic loss could a 10-year old vehicle sustain versus just being an older car?

    I saw one news article that indicated the additional cost could be ~$2 billion.
    Feb 17, 2015. 08:18 PM | 1 Like Like |Link to Comment
  • A Dissolving Overhang Marks General Motors A 2015 Top Choice [View article]
    Thanks for the clarification, JDoe20

    Unfortunately, the legal system targets the Corporation. "New" GM shareholders are only "protected" as long as the courts uphold the terms and conditions of the original bankruptcy ruling. "New" GM shareholders were no guaranteed immunity from previously liabilities if it's proved that the "old" General Motors failed to properly disclose such liabilities.

    There was an interesting case involving GM and a 2010 plaintiff that all interested stockholders should review: the Melton case. Here, GM permitted a claim against the "old" GM to bleed through to the "new" entity. This precedent could be the thin edge of the wedge the current plaintiffs seek to overturn the 2009 ruling.

    Certainly worth watching.
    Feb 17, 2015. 07:49 PM | 2 Likes Like |Link to Comment
  • A Dissolving Overhang Marks General Motors A 2015 Top Choice [View article]
    Here's a link:

    http://bit.ly/144ZGSv
    Feb 17, 2015. 05:55 PM | 1 Like Like |Link to Comment
  • A Dissolving Overhang Marks General Motors A 2015 Top Choice [View article]
    NOTE to READERS: In a 13-F filing, just released:

    Warren Buffet / Berkshire Hathaway added 1 million GM common share during 4Q 2014. The total shares owned has increased from 40 million to 41 million.

    This is not an explicit endorsement for GM, and of course we are now 6 weeks into 1Q 2015; so things may have changed again.

    However, long-term investors may decide to view this information as leaning more positive than negative.
    Feb 17, 2015. 05:51 PM | 3 Likes Like |Link to Comment
  • A Dissolving Overhang Marks General Motors A 2015 Top Choice [View article]
    Perhaps....perhaps not. Depends upon time frame and perspective. If the bankruptcy protection is pierced, the trial lawyer still must work through economic damages. These should be finite, as anecdotes appear to note old GM vehicles have not lost a great deal of resale value. These are all eligible for switch repair.

    I view the BK proceedings, if ultimately a negative outcome for General Motors, a setback versus a disaster. Part of that view is predicated upon the board just increasing the dividend by 20%. That group knows the issues; it's highly unusual for a dividend increase to be followed by a dividend cut. Especially when the cut would be due to a legal judgement against the corporation.
    Feb 17, 2015. 05:10 PM | 2 Likes Like |Link to Comment
  • A Dissolving Overhang Marks General Motors A 2015 Top Choice [View article]
    Thank you, Momintn, for adding some color to GM's auto technological lead. Amidst other issues, this has not received a great deal of attention.

    I believe it will garner more publicity in the future, and supports an overall investment thesis.
    Feb 17, 2015. 05:03 PM | 1 Like Like |Link to Comment
  • A Dissolving Overhang Marks General Motors A 2015 Top Choice [View article]
    Additionally, I could not resist selecting your comment, funfun, as an "author's pick."
    Feb 17, 2015. 01:42 PM | 2 Likes Like |Link to Comment
  • A Dissolving Overhang Marks General Motors A 2015 Top Choice [View article]
    funfun

    Many thanks for the very kind words, and sharing your insight: there is a risk of the auto business near top-cycle.

    Typically, the Consumer Discretionary sector out-performs during the early phase of the economic business cycle. However, this particular U.S. recovery has been slower to develop than many, and General Motors is a play on global markets versus simply domestic.

    Feb 17, 2015. 01:40 PM | 2 Likes Like |Link to Comment
  • A Dissolving Overhang Marks General Motors A 2015 Top Choice [View article]
    bilow

    The dividend is a major factor in the investment thesis. That fact that GM raised the payout 20% is instructive: rarely will a board increase the dividend if there is a chance of having to quickly reverse it.
    Feb 17, 2015. 12:37 PM | 1 Like Like |Link to Comment
  • A Dissolving Overhang Marks General Motors A 2015 Top Choice [View article]
    lemm

    I've noticed the same articles. However, I am confident that trial lawyers will figure out an attack if GM loses bankruptcy-filing immunity.
    Feb 17, 2015. 12:35 PM | Likes Like |Link to Comment
  • A Dissolving Overhang Marks General Motors A 2015 Top Choice [View article]
    Thanks for reading and adding some most lucid comments, Phr3d. Onya for staking a position in the New GM very early-on!

    GM investors have 2 big mileposts remaining: one is the determination of whether the pre-bankruptcy indemnification stands. The second, apparently less of a long-term issue, is the conclusion of the DoJ investigation and fine.
    Feb 17, 2015. 08:00 AM | Likes Like |Link to Comment
  • A Dissolving Overhang Marks General Motors A 2015 Top Choice [View article]
    Many investors do recognize the reorganization recapitalized General Motors, including debt relief. That's the intent of filing under Chapter 11 of the U.S. Bankruptcy Code.

    Looking forward, some view this as part of an investment thesis to purchase shares.

    Indeed, if the reorganization has the the effect to "advantage GM financially for years," would that not be a good thing for current or prospective stockholders?
    Feb 16, 2015. 11:03 PM | 3 Likes Like |Link to Comment
  • A Dissolving Overhang Marks General Motors A 2015 Top Choice [View article]
    american patriot

    Generally, politics and investing make for poor bedfellows.

    I'm not sure where you wish to go with the comment above, but the bankruptcy proceedings were completed in 2009. These are now over. Many may not have agreed with some of the rulings: I did not like the way certain GM bondholders were strong-armed. Others argued General Motors should have been allowed to go Chapter 7 and into liquidation. All great cocktail-party debates; but it's not going to change anything.

    Since 2010 (the first full year post-bankruptcy), GM has increased operating cash flow. YE 2010 OCF was $6.8 billion. Last year, it was $10.1 billion. Some investors have been watching that. Warren Buffett, for one?
    Feb 16, 2015. 09:01 PM | 2 Likes Like |Link to Comment
  • A Dissolving Overhang Marks General Motors A 2015 Top Choice [View article]
    Yes, after reading the WSJ article, GM's pre-bankruptcy indemnification claim isn't a lock. Losing it would touch off a long legal battle over pre-2009 economic damages. Some trial lawyers will argue that not should affected car owners receive compensation, but ANY GM car owner, whether the ignition-switch issue affected their vehicle or not.

    Could be a field day for the trial lawyers.
    Feb 16, 2015. 08:33 PM | 1 Like Like |Link to Comment
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