Shiv Kapoor

Is ConocoPhillips a Potential Multi-Bagger?

It is not possible to own every stock I like. I create a watch list and look to buy into various stocks I like as and when I replace a position I have recently exited (normally to book a profit or rotate to sectors I expect will outperform).
For example, at present I am keen on buying HD and HMC as these are discretionary stocks, which I feel are good long term buys and I expect them to outperform in the short term - I could buy them buy booking some gains on my early cyclicals but am reluctant to do so simply because the condition of the US consumer is a higher risk compared with growth opportunities in IT/Industrials/Materials which are getting better support from overseas. Nevertheless first use of surplus cash will go to these stocks because I am as overweight early cyclicals as I will accept. If HMC/HD outperform following purchase, I will book profits (not principal) in 3 to 6 months and use the profits to buy into COP/CVX which are also stocks I like; but I expect these (energy sector) to outperform later in the cycle; I will also use funds from partial exit of industrials to finance build in energy positions.

Slightly further down the road, I am very keen on buying JNJ/KO/VOD/WMT; these will be defensive & income positions and will be purchased on exit of positions (more likely booking profits) in early cyclicals - basic materials/industrials/...

There is really nothing sinister about writing about an interesting stock and watching it until it makes sense to buy - after considering alternative opportunities and liquidity and forward outperformance expectations. Can you honestly declare that you own every stock you like? If not, why should I?


On Oct 01 06:43 PM Oilbull wrote:

> Just joking on the Dell thing...but seriously, why write up a report
> on something you have no interest in either pro or con?

Is ConocoPhillips a Potential Multi-Bagger?

Stop being amazed. It is not possible to own every stock I like. I create a watch list and look to buy into various stocks I like as and when I replace a position I have recently exited (normally to book a profit or rotate to sectors I expect will outperform).
For example, at present I am keen on buying HD and HMC as these are discretionary stocks, which I feel are good long term buys and I expect them to outperform in the short term - I could buy them buy booking some gains on my early cyclicals but am reluctant to do so simply because the condition of the US consumer is a higher risk compared with growth opportunities in IT/Industrials/Materials which are getting better support from overseas. Nevertheless first use of surplus cash will go to these stocks because I am as overweight early cyclicals as I will accept. If HMC/HD outperform following purchase, I will book profits (not principal) in 3 to 6 months and use the profits to buy into COP/CVX which are also stocks I like; but I expect these (energy sector) to outperform later in the cycle; I will also use funds from partial exit of industrials to finance build in energy positions.

Slightly further down the road, I am very keen on buying JNJ/KO/VOD/WMT; these will be defensive & income positions and will be purchased on exit of positions (more likely booking profits) in early cyclicals - basic materials/industrials/...

There is really nothing sinister about writing about an interesting stock and watching it until it makes sense to buy - after considering alternative opportunities and liquidity and forward outperformance expectations. Can you honestly declare that you own every stock you like? If not, why should I?

On Oct 02 01:24 PM The Hammer wrote:

> I amazes me that people write these articles then disclose they own
> 0 shares??
> COP has made some quality acquisitions, but mulva's timing is rather
> poor. In addition, When oil and Nat gas were sky rocketing in price
> over $100 and $12 mcf I wrote an email to the Board of directors
> telling them that they should hedge some production something like
> 25-50% and let the rest float with the market.. My main reason was
> that the oil prices was above the inflation adjusted highs and the
> company just made a few large acquisitions and it would be prudent
> to lock in some production to pay down debt , continue the dividend
> and maybe even buy in a few shares of stock. i received some non-sense
> email back stating that investors wanted the oil price to float and
> that they should hedge against it if you wanted.
>
> What a bunch of dolts on the board!

Is ConocoPhillips a Potential Multi-Bagger?

The calc indicates that for every $100 put in at annual average price of $18.10, you would have stock worth $327 today + dividend income. If you purchased 100 shares at $18.10 (adjusted for splits and div) which was the annual adjusted price during 1999, you would expect to have shares worth 3.27*$1,810 = $5,918 assuming you reinvested dividends. You have $9,508 and have done much better. My guess is that you were wise enough to have bought at lower adjusted closing prices (range during 1999 was $14.32-$21.67) and you must have benefited from the 2 for 1 split in June 05. In my view return of 525% over your holding period coupled with dividend income of over $250/year is a very good return.


On Oct 02 08:27 AM Shocked wrote:

> Something is very wrong with your math calculations. I have had 100
> shares since 1999 and I have reinvested the dividends and my total
> value is only $9508. So where is my money?

OPEC and Production Cuts: Why Now's the Time to Buy

I think RIG, NOV & SLB are now attractively valued. Expect bottom on SLB of $32-$33; RIG of $38-$39 and NOV of $17-$18. Earnings flows for SLB should be fairly negative for the next 2/3 qtrs so it will likely give a buy on declines opportunity. The same holds true for RIG/NOV but these two are somewhat insulated because of excellent backlog.


On Dec 02 08:34 AM yank wrote:

> ""Valuations might get better"-
> You have to be kidding right? RIG, NOV, and others are trading at
> P/Es of 3 or 4, with a PEG ratio of 0.3 It doesn't get any cheaper
> than that. Basically, these cos are being valued at $15 oil. As you
> say that will never happen. Yes sentiment is poor. But much of that
> is tied to the strong US dollar (USD). I cannot see the current rally
> in the USD as being sustainable. When it cracks oil prices will adjust
> upward.

OPEC and Production Cuts: Why Now's the Time to Buy

I would say projects now coming to fruition were based on oil projections at $40-$45. With opex inflation running at 6% and capex inflation running at 12%, average project inflation is 9%; which is some 6% over CPI based inflation of 3%. $40 compounded at a 4% inflation premium for the industry calls for $60 oil.


On Dec 04 01:41 AM M3 wrote:

> Good aricle. But the whole basis for your arguement is that USD60/bbl-USD75/bbl
> is the price needed to cover the marginal cost of production for
> the additional 7mbd needed now to keep the world running. Why would
> you think its USD60-75/bbl and not lower like USD30-45/bbl? Oil fields
> keep pretty tight-lipped about production costs so the actual marginal
> costs are anyone's guess. However, its a fact that a lot of the increases
> in production that is coming online now were based on oil prices
> forecasts of USD30-45/bbl made 10 years ago. Not alot of people had
> the vision back then that oil would go this far up (especially when
> oil was trading at around USD15-20/bbl). USD60-75/bbl might be needed
> for future projects but those that will be coming online in the next
> 2 years definately have lower costs. Hence, although prices probably
> won't go too far down, it might be 2-3 years before they rebound
> to the USD70's/bbl level.

OPEC and Production Cuts: Why Now's the Time to Buy

SLB is a top notch company. Risks are marginally higher because the impact on earnings cannot be assessed until producer capex budgets are adjusted for lower oil prices; i.e. less visibility. Also while the dividend yield on this stock is good and very secure, BP's is as secure and higher. The BP yield gives you the long term market returns and this mitigates risks greatly. Finally, market is not fully pricing in BP's recovery from its Alaska/GoM problems of the past. SLB is excellent value here and I will likely accumalate on dips.


On Dec 02 02:37 PM mannheim wrote:

> Why are the Oilfield Services companies like SLB higher risk?

OPEC and Production Cuts: Why Now's the Time to Buy

Taken into consideration. New production coming on line replaces reduction from existing production and then some. This cannot continue for ever, but as of now, there are enough new production fields to replace falling production from older fields.


On Dec 02 03:12 PM melfsh wrote:

> Did I miss it, or did Mr. Kapoor not take into consideration that
> the fields that are currently produceing the 86 million barrels a
> day are declining at a 4-5% rate per year?

OPEC and Production Cuts: Why Now's the Time to Buy

you can get the numbers from EIA's website. This www.eia.doe.gov/steo links to an EIA article; numbers are largely from files available on the bottom right hand corner of thw webpage.


On Dec 02 09:01 AM bertil wrote:

> Excellent clear thinking backed up with (hopefully reliable?) facts.
>
> My question: Why do you prefer BP to other integrated oil companies?

OPEC and Production Cuts: Why Now's the Time to Buy

mainly div yield & turn-around potential; in prior upcycle they were plagued with misfortune & qhse problems - I think the right steps have been taken to effect a powerful turn-around.


On Dec 02 09:01 AM bertil wrote:

> Excellent clear thinking backed up with (hopefully reliable?) facts.
>
> My question: Why do you prefer BP to other integrated oil companies?

OPEC and Production Cuts: Why Now's the Time to Buy

WTI = $75. Rest get penalty or premium on WTI depending of it is heavy or light sweet crude.


On Dec 02 08:39 AM paultaut wrote:

> Opec crude is priced about $5 below WTI because it is a basket of
> oil grades. Meanwhile the garbage crude produced by Iran and Venez.
> is about $10 below.
>
> When the target of $75 is bandied around, are the Marginal suppliers
> getting $65 or does the $75 refer to Iran/Venez. and WTI is really
> $85?
>
> Can you clarify?

Oil Will Only Fall So Far

Oil will fall only so far for now. But how far is far enough. Near term, oil is oversold; by 11 September a couple of weeks of falling inventories & the result of OPEC should firm up oil. Russia is another threat but one already priced in. Still got a month of hurricanes & then winter demand. So worst case would be $95-$100.

But thinking longer term - where goes oil? Ultimately, equilibrium is where demand meets supply. In a perfect market, price would strike at the marginal cost of a barrel; which is near $50. That, or somewhat below is where I see the bottom for oil in the next cyclical oil bear within a great secular bull.

I would go long oil once it starts consolidating & go short rate sensitives & financials.