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  • Comprehensive Review Of Newbuild Orders For Drillships And Semisubs [View article]
    Good, focused piece PP. Also like RIG (and ESV) at this level. Balance sheet always matters, the offshore industry is notoriously cyclical..
    Sep 12 05:18 AM | 2 Likes Like |Link to Comment
  • Yield On Cost: A Vitally Important Consideration For Retired Investors [View article]
    Outstanding article Chuck, required reading for all mid- and long-term investors!
    Your article, and especially the detailed real-life portfolio example from 2006-2014 which includes the credit crisis, provides great insight into why people should set-up a diversified portfolio of solid companies at a fair price, based on your risk appetite and financial goals. Only then can you benefit from growth in earnings and increased YOC over time, while being patient and not panicking when confronted with short-term fluctuations..

    The more you trade, the more you usually start to underperform. Why wouldn't you keep it simple and focus on a few easy to understand investments in businesses with proven competitive advantages.
    Sep 9 05:58 AM | 1 Like Like |Link to Comment
  • China Integrated Energy: Ripe for Significant Upside After Appointing New Auditor, Updating Guidance [View article]
    Thanks for posting the 10/K Caifu, it's been a long time coming..
    Sep 5 04:21 AM | Likes Like |Link to Comment
  • Calm After The Storm: Royal BAM Group Offers Value At The Bottom Of The Well [View article]
    KBC Securities update BAM, 'Come rain or come shine':

    Rabobank update BAM, 'Some trouble, but can double':

    "BAM stated that the new CEO will present more details regarding the cost and working capital reduction programmes in October. We reiterate our opinion thet the current share price offers attractive upside versus the assumed risks and our SOTP [sum of the parts - red.] of EUR 3,78 per share is backed by hard assets. We reiterate our Buy and PT of EUR 3,00."

    "For FY 2014E BAM forecasts a profit before tax and exceptional items of around EUR 20m. In our view, the company is somewhat too conservative and we are estimating EUR 32m."

    "On a positive note, BAM's balance sheet includes EUR 194m PPP assets (net of debt) and >EUR 1bn tangible property development assets. The Dutch housing market is improving faster than anticipated and this could unlock EUR 50m free cash flow per annum."
    Sep 3 04:49 AM | 2 Likes Like |Link to Comment
  • Calm After The Storm: Royal BAM Group Offers Value At The Bottom Of The Well [View article]
    Interesting to hear you have worked and lived in Russia during your career. I've written articles on both Rosneft ( and Gazprom ( during the past 24 months, and have been following the political and economic situation there with some interest for a number of years now.

    I think Russia's post-Putin era is still a long way off, and a lot of damage is being done in the meantime. Were it not for the country's abundance of natural resources (and Western + Eastern reliance on those resources) the country would be in a very difficult situation indeed, although many will succesfully argue that is already the case now.

    On BAM, I certainly understand your disappointment as a longer term shareholder. Past management's performance in terms of risk assessment, execution, cost control, and lack of focus on maximizing profitability and shareholder value is evident to witness. The tough economic situation between 2008 - H2 2013 has also left its marks.

    On the other hand, this article was written as a dividend quick picks & list (requiring additional own DD) piece before being selected as Pro by SA. Based on BAM's current depressed share price, which provides compelling YOC and valuation metrics, also in light of historic dividend levels and earnings potential.

    The announced improvement programs - if properly executed -, a new management team, and increased (Dutch) economic activity may provide positive catalysts for BAM going forward. Technically the share price seems to be bottoming out since the low of August 8, trend improvement the last week or so since release of the H1 numbers.
    Sep 1 05:32 AM | 2 Likes Like |Link to Comment
  • Calm After The Storm: Royal BAM Group Offers Value At The Bottom Of The Well [View article]
    Aug 29 11:30 AM | 1 Like Like |Link to Comment
  • Calm After The Storm: Royal BAM Group Offers Value At The Bottom Of The Well [View article]
    Well, you're certainly entitled to your opinion Enge. I would, however, like to point out that the Dutch government has been making the labor market more flexible, the pension system more sustainable (while already on of the most sophisticated in the world, ranked second worldwide last year), and has been actively stimulating the housing market to good effect along with the general trend of lower spending.

    Next to the pick up in housing, you're also seeing a recovery in household spending. The EC actually increased its Dutch economic forecasts for this year and 2015 because of rising investments and increased household consumption. Economic growth turned positive in Q2 2013 and projected to continue its momentum this year and into 2015.

    Despite the many difficulties Holland may face it should, lastly, be noted that the Netherlands still remains one of the most competitive economies in the EU. I think the country as a whole isn't doing too shabby all things considered..
    Aug 28 09:19 AM | 1 Like Like |Link to Comment
  • To Handsomely Beat The Market, Buy Petroamerica Oil With Both Hands [View article]
    Only slight worry with the 180 million CAD 0,75 warrants is PTA becoming a victim of its own success..

    CAD 0,425 today and climbing couple % each day. If we get several big buyers between now and October expiry it might just get interesting..

    BTW, great write-up VD
    Aug 26 10:01 AM | 3 Likes Like |Link to Comment
  • More on the Rosneft, North Atlantic Drilling deal [View news story]
    Long both ROSN.L and NADL and trust me, this is a great deal for both. Rosneft secures much needed equipment. NADL gets the partner of a lifetime, world's largest public oil co..

    Never underestimate the Russkies, they just do when others talk. Why do you think Tillerson wants to be big buddies with Sechin. The Artic is untapped gold..
    Aug 22 09:27 AM | 4 Likes Like |Link to Comment
  • Transocean: Short-Term Risks And Below Peer Group Upside [View article]
    If that's your logic, who cares about regular maintenance, upgrades, modification to latest spec or customer demands.. Age is what matters, nothing else. If everything was that simple..
    Aug 12 11:58 AM | 1 Like Like |Link to Comment
  • Transocean: Short-Term Risks And Below Peer Group Upside [View article]
    Anthony, I would just like to touch on the data points you mention..

    Firstly I believe contributors are currently tripping over each other in putting a lot of emphasis on the ratings downgrade by DB analyst Mike Urban. As I also commented in another article, confirmation bias is certainly a risk with individual analysts (as with investors), so I would always focus on the consensus recommendation as a more balanced starting point. Transocean is currently covered by 23 firms, with a consensus recommendation of Hold.

    Regarding the second data point you mentioned, RIG's Q2 earnings, you state the following: "As previously reported, in Q2, RIG beat consensus estimates, with $1.61/share in earnings. Earnings are, by definition, backward looking, and (in this case) were not that interesting to me (aside from progress on cost controls)"

    It's certainly not my objective to chance your view, as you're entitled to yours based on your own DD, and that's what makes a markets. But, if you go beyond RIG's most recent earnings surprise and view it in light of the last few years, you will notice a trend to be seen. For the last 5 quarters for example either they were on the money or had a pretty healthy earnings beat. Some indication on how a company is managed. More earnings and FCF is always a good thing.

    Earnings (per share) - REUTERS
    Quarter Ending Jun-14 1.12 (Cons Est) 1.61 (Actual) 0.50 44.39%
    Quarter Ending Mar-14 1.02 (Cons Est) 1.43 (Actual) 0.41 39.73%
    Quarter Ending Dec-13 0.73 (Cons Est) 0.73 (Actual) 0.00 0.58%
    Quarter Ending Sep-13 1.07 (Cons Est) 1.37 (Actual) 0.30 28.59%
    Quarter Ending Jun-13 1.08 (Cons Est) 1.08 (Actual) 0.00 0.34%

    I wrote an article on Transocean's value proposition on December 27, 2011 , 18 months after Macondo, and I personally think management has taken the right steps since that time to get the company back on track, returning to 'normalized' earnings, and in better shape for the future. All the while keeping a firm eye on the balance sheet in light of Macondo and the cyclical nature of this industry, of which management is keenly aware as discussed on several occasions throughout recent years, even when day rates were going through the roof. With roots tracing back to 1920 you wouldn't expect otherwise from RIG.

    One final recent data point that really should be noted is Mexico's decision last week to open up its energy sector, which will of course prove positive for (established) drillers and the overall demand vs supply picture
    Aug 12 05:36 AM | 2 Likes Like |Link to Comment
  • Transocean: Deutsche Bank Is Way Off [View article]
    "Mike Urban released his (sell) "recommendation" a couple days before RIG released its earnings!"

    He certainly didn't say anything during the earnings call to acknowledge Transocean's healthy consensus beat, the higher dayrates or reduced O&M costs.. Confirmation bias is a tendency to actively seek out and assign more weight to evidence that confirms your hypothesis, and ignore or underweigh evidence that could disconfirm your hypothesis...

    We will go next to Mike Urban with Deutsche Bank.

    Mike Urban - Deutsche Bank:
    So obviously you've talked repeatedly about continuing to high grade the fleet and moving away from the mid-water market but for the time being you do have those assets and continue to manage them, especially in the context of thinking about potentially monetizing them or selling them, if you do see some of the pressure that you talked about in terms of higher spec grade competing down. How you think about those assets in terms of your ability, your willingness to continue work from that kind of marginal profitability if it comes to that. In the past you might have stacked that kind of asset? Would you keep working there to maintain value for it and just how you think about those assets to the extent you still have them and as we see this market potentially grind lower in the short term?

    Steven Newman:
    Probably a really unsatisfactory answer for you Mike but it all depends. We will evaluate it on an asset by asset basis and when think we have an asset that is likely to survive this current downturn and be a productive and profitable asset coming out, we are likely to try and maintain the utilization on that rig. If on the other hand we think the asset truly is approaching the end of its life, we're likely to take a different decision and if the economics don’t support continued operation of the asset in the near term then we will make a decision to either try and scrap the asset ourselves or attract some kind of a third-party offer that would allow us to reduce our exposure to that kind of an asset. So, it all just depends on our long-term view of the asset and the fundamental thesis that this is a cyclical business and we will see some cyclical recovery in the future."
    Aug 9 08:35 AM | 3 Likes Like |Link to Comment
  • Transocean: Deutsche Bank Is Way Off [View article]
    I think the recent Q2 results, and as important the conference calls of ESV and RIG, should sufficiently reassure investors. It also shines proper light on the one-sided, limited questions the DB analyst asks, as opposed to some of the other analysts. Confirmation bias is very common among analysts, they're not unlike investors in that respect.

    Yes, there is increased supply between now and 2016, more uncontracted rigs. Yes, there is increased competition and lower pricing in certain segments due to IOC's and NOC's temporarily reducing CapEx. Yes, this is a cyclical business.

    No, it hasn't been and won't become a huge problem, for these two companies at least. They for one do have sufficient liquidity and flexibility, strong investment grade balance sheets, a focus on cost control. New, already contracted rigs being delivered and going to work. They have to put more effort in and indeed tenders are down, but all indicate you're talking about 12-18 months. Their share prices are already priced for (far) worse, including reduced dividends which won't happen.

    The 1.5 billion non-cash impairment charge of ESV spooked the market, because if the most responsible guy does it then RIG, DO, Noble will certainly be in the same boat. But once you read ESV's Q2 transcript you suddenly understand why the new CEO and board decided to do it now, and sheds light on the immediate benefit is and future benefits of doing it like this. RIG's reaction to an analyst question on ESV's charge is also important to read.

    I would advise every shareholder that feels rattled by the recent price action in drillers to read the Q2 transcripts of RIG and ESV, available through SA.
    Aug 8 11:13 AM | 6 Likes Like |Link to Comment
  • Update: Ensco Earnings [View article]
    Why would one possibly invest in Ensco, the world's 2nd largest offshore driller.. besides maybe 1) a highly rated management team with proven track record on modernization and profitable divestment 2) stable, growing earnings, 3) solid balance sheet with low leverage, 4) among the youngest fleets, 5) low, sustainable pay-out ratio, 6) 6% dividend yield @ $50 share price, 7) 8 new rigs for delivery by Q4 2016, of which 2 this year and 1 by Q1 2015.

    They just get on with doing their job well in this highly competitive, cyclical business, for all their stakeholders.
    Jul 31 10:55 AM | 6 Likes Like |Link to Comment
  • Update: Ensco Earnings [View article]
    Q2 EPS estimates were $1,32. Ensco beat by nearly 20%, coming in at $1.58..
    Jul 31 09:26 AM | 4 Likes Like |Link to Comment