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Stock Market Mike

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  • Energy EXXI: A Major Opportunity For Patient Investors [View article]
    If oil drops to $80 and below, all the oil stocks will be completely shelled. You'll have a once in a lifetime opportunity to grab some of them (like EXXI) as cheap as $3. Maybe less. Maybe some will sell for less than the cash onhand. All the analysts will be raving, predicting prices of $50 or $60 per barrel by next year, while declaring frakking the source of an oil glut. It'll be nothing but doomsday fear on wall street!

    What you have to consider before buying EXXI is whether they can stay afloat with that much debt, negative free cash flow, and oil prices that cheap... I don't know.

    When I speculate, I really like to speculate - I'm heavily into NADL, based on two assumptions. One, this Russia stuff blows over. Two, oil prices stay reasonable. If either of those proves false... ut oh. I'll be in just as much pain as you.

    Oct 1 09:42 PM | Likes Like |Link to Comment
  • Seadrill: How To Play With A Falling Knife [View article]
    I've been wondering if it's possible to turn the dividend into loans, and shareholders into bond holders or banks? If you hold 1000 shares and receive $1000 per quarter, instead you loan the $1000 back to SDRL at 3% for 3 years. So you collect $1090 or a bit over that a few years from now. Make it senior unsecured debt for safety. SDRL can use the funds to pay down other floating rate debt that has hedging costs.

    Sep 30 12:39 PM | 3 Likes Like |Link to Comment
  • Seadrill: Price Capitulation Is Near [View article]
    With iron prices dropping to multi-year lows, probably not too soon? (See VALE)

    Sep 30 11:48 AM | Likes Like |Link to Comment
  • Seadrill: Price Capitulation Is Near [View article]
    I'm heavily into NADL instead. I looked at the risks, and figured sanctions will probably blow over. If they do, NADL's payout ratio will be well under 50% in a few years... unless they raise the dividend. SDRL however has quite a bit of debt and lots of new rigs that will require contracts. If they sit idle or accept lower contract rates, that's bad. Its workable solution to debt/funding issues is to drop down assets to partially owned subsidiaries, which means it has a lower percentage of earnings in the future. It can do this plenty, but each time it reduces the odds of their earnings ever passing $4/share on a sustained basis.

    As such, between NADL/SDRL, I'm weighted heavily towards NADL... probably about 70%.

    Sep 30 11:46 AM | Likes Like |Link to Comment
  • American Realty Capital Properties: Yield + Potential For Capital Appreciation = Strong Buy? [View article]
    Most companies that eventually get respect (like SWKS) were executing in a solid manner for ~4 or so quarters before they took off.

    Since they only have 2 solid quarters behind their belts, I'd say mid to late 2015. Hopefully rates don't rise aggressively before then, as that'd cause another selloff.

    Sep 29 01:19 PM | 1 Like Like |Link to Comment
  • Craig-Hallum upgrades Himax [View news story]
    Most analyst upgrades and downgrades are reactive rather than predictive. That's why you never see PTs that are way higher than the share price. They inch them upward depending on what the stock is doing.

    "Oh, it went up 15%. I better bump my target by 15%."

    "Oh, it went down 20%. I better drop my target by 20%."

    Even so, they have their uses. The downgrades pummeling HIMX provided a pretty good entry point under $6.

    Sep 29 10:51 AM | 1 Like Like |Link to Comment
  • Don't Panic, Grab Seadrill Out Of The Bargain Bin Instead [View article]
    NADL and SDRL... I bought a fair bit of NADL when I saw a 15.3% yield. It's a gamble, but even without the Russia growth they can just barely cover their dividend and debt.

    NADL recovered in price a tad. Stop loss in place, so that should hopefully keep me from catching a knife.

    Sep 29 01:19 AM | 1 Like Like |Link to Comment
  • Hutchinson Technology, Revisited [View article]
    HTCH is a prime example of operating leverage. If they execute properly (which they admittedly don't have a great track record for), then earnings could go from very negative to quite positive in just a year or two. With so few shares outstanding, it should be easy for them to hit $0.10 in EPS... and then $0.30... and then... you get the picture.

    But they do have that debt overhang for the time being, and how they deal with it will determine exactly how much upside or downside their shares have.

    I see some parallels to companies like IMOS and GTAT - years of heavy spending, big losses, and then (hopefully) a profitable emergence. I think this is one company where you don't want to be rear-view-mirror investing. It's one of my smaller positions and is on a tight leash, but I think they've got a shot.

    Sep 27 06:07 PM | 1 Like Like |Link to Comment
  • Omega Healthcare Is A Blue Chip Model Of Predictability [View article]
    Sounds like you bought at the top of the wave.

    Their growth should save your investment eventually, but next time be a bit more prudent selecting an entry point. As you now know, with a 6% yield you could wait over two years for a good entry point and come out with the same return. I don't believe this downward action is finished just yet, but I suppose we'll see.

    Sep 27 04:07 PM | Likes Like |Link to Comment
  • Omega Healthcare Is A Blue Chip Model Of Predictability [View article]
    It's $2.10 annualized since they raise it $0.01 every quarter... or $2.10+(0.16*Years)

    To project out how it will look two years from now, add 8 quarters of penny raises and then add together four quarters.

    And then you'll have $2.42 in dividends per year in late 2016.

    Sep 27 04:01 PM | Likes Like |Link to Comment
  • Omega Healthcare Is A Blue Chip Model Of Predictability [View article]
    The market is pricing in a rise to 3%+ on the 10yr in 2015.

    OHI has strong growth... 10-15%... the lowpoint in 2013 was around $27, so the lowpoint now should be $31-32 at the lowest. Interest rates will cause its price to get wavey and you'll see some red, but whether the company can pay its dividend or not should not be affected.

    Sep 27 03:56 PM | Likes Like |Link to Comment
  • Omega Healthcare Is A Blue Chip Model Of Predictability [View article]
    Perhaps when the payout ratio hits 50-60%, they'll start monthly dividends rising $0.01 per month?

    Sep 27 03:51 PM | Likes Like |Link to Comment
  • Update: Seadrill Subsidiary To Raise $250 Million In Equity [View article]
    It's an MLP, so I hope you consider the tax implications of selling "some shares" rather than all or none, at least within a taxable account.

    Sep 25 01:09 PM | Likes Like |Link to Comment
  • Still too early to buy offshore drillers, Wells Fargo says [View news story]
    I'd opt for the 2016 LEAPs, myself... or the 2017 ones for deep ITM. There's no guarantees that the next few months are going to be pretty for drillers...

    If we do get a spike back up near $40, remember to take profits...

    Sep 25 02:10 AM | Likes Like |Link to Comment
  • North Atlantic Drilling: But What If The Rosneft Contract Is Executed? [View article]
    Assuming offshore drillers haven't sold off another ~20% by then... it'll go higher, of course!

    Sep 24 11:16 PM | 1 Like Like |Link to Comment