ockham

Dow Nears 50% Retracement; Tread Carefully

Thanks for your comment, Prudent Man CFA. I certainly respect and appreciate your comment as far as technical analysis, and you are correct we are not technical analysts in nature.

What we were trying to point out is more of an "Oh my God!" moment...we have lost 50% from the highs. My apologies for misuse of the word retracement.

On Feb 23 04:34 PM Prudent Man CFA wrote:

> Although I use technical analysis as a tool where appropriate, I
> would not classify myself as a "technician". Neither is the person
> who wrote this article.
>
> A retracement is calculated from the beginning of a trend to the
> top or bottom as appropriate, not from 0. Any bull market "retracement"
> was wiped out over a thousand points ago. A retracement in a bear
> market is from the bottom so we are not even near any such thing.

Rohm and Haas: What It's Worth

ThunderBolt,

Thanks for the taking the time to read and comment on our article but I assure you we have no interest in doing Dow's bidding. It seems clear to us that the acquisition was made prior to the market meltdown and thus looks increasingly expensive to Dow. Even a ROH shareholder would have to agree.

As for our research appearing in Dow Jones, I am not sure what that has to do with Dow Chemical. The confusion of one Dow for another Dow leads me to "DOW-t" your intentions.

Many thanks to User for the kind words as well, I do appreciate them!


On Feb 13 03:13 PM UserThunderBolt wrote:

> It is shameful to see "research companies" (and I am taking liberties
> is using that term) doing Dow's bidding to talk down the M&A
> price. I wouldn't be the least bit surprised to see your "analysis"
> picked up by Dow Jones or Reuters.

Apple Should Now Institute the Executive Weigh-In

wow...just have to comment on this. First, you cannot quantify health by just weight. Is anyone else worried about the implication of reporting personal information even if it is health related. Could we ask them to submit there number of adult beverages, or how many fried foods they ate. Check yes or no for tobacco? Smoked or smokeless? How many speeding tickets do you have? How fast? What kind of car? Tire pressure?

How personal do you want to get? I could see it going much further...

Its a slippery slope, there is so much that goes into peoples lives that can contribute or detract from their performance at work. The Jobs situation has everyone on high alert, but don't start throwing out half baked ideas that could do more harm than good. Being a CEO should not make you subject to a microscope of this scale.

Invest Now with a Keen Eye and Be Regarded a Genius for Decades

Todd,

I appreciate your article and have become a fan of your straight-forward writing. I like many of the other that have commented agree with your assessment of oil and its prospects in the near future. The geopolitical risks that you speak of, IMO, only become more intense as the price of oil drops...the "wackos" as you call them only become more wacko as their economies are running in the red.

Question: I have been closely watching DXO for a few weeks now, and I have noticed a troubling trend. The double long oil is NOT tracking the price of crude very accurately at all. There are even days were oil futures are down and the ETF is up. Thus far, the tracking errors have only been to DXO investors advantage, at least that I have notice.

Is this a cause for concern? Could you shed any light on what is going on here?

NuStar: Finding Profits on the Bottom of the Barrel

I received this response from Investor Relations at NuStar, please note his clarification:

To Whom it May Concern:

I am the Director of Investor Relations at NuStar and wanted to say I really enjoyed your recent article titled, "NuStar: Finding Profits on the Bottom of the Barrel."

However, I would like to clarify one point in the article.

In the article, Mike Pesch, Vice President of Refining at NuStar, explains the net shortage of asphalt as follows:

“The U.S. overall has a net shortage of around 20,000 barrels a day of asphalt. If these projects come in as we’re seeing them come in, you’re looking at a potential of extra demand in the United States of around 250,000 barrels a day.”

The word "projects" was not meant to describe the expected infrastructure projects from the proposed stimulus plan, but rather the "coker projects" that refineries will be undergoing over the next few years that we believe will result in this tighter supply of asphalt.

You see, the whole rationale as to why we purchased this business from CITGO in March 2008 was based on the installation of coker projects, not infrastructure projects.

This is part of a strategy that is based on our belief that asphalt margins will improve as supply will be limited compared to continuing global demand as more coker units are added by refineries in the U.S. and abroad. In fact, the whole notion of infrastructure projects was not even an topic of issue at the time we first announced the acquisition in November 2007.

To explain further the coker rationale….Higher refining margins have improved coker economics, which have led to many refineries to add coker projects in the U.S. and around the world. Coker units allow refineries to take what was formerly used to produce asphalt and upgrade it to higher value products like gasoline and diesel. As more of these coker units come online, the asphalt supply is expected to get tighter or as Mike Pesch mentions, going from 20,000 barrels per day net short asphalt to around 250,000 barrels per day net short asphalt by 2013.

So, we are not necessarily banking on infrastructure projects, but rather coker projects coming online and causing the asphalt market to become tighter.

The proposed stimulus plan is really just "extra gravy" for us if it comes to pass.

Please let me know if you have any further questions. Again, great article. Thank you.

Mark Meador

NuStar Investor Relations

OPEC Pledge: Another Production Cut

David,

Thanks for your comment. And I must say that I agree with your points about the backlog of business and the overall trend for oil to become ever more valuable once the global economy turns around. After all, the original article where I wrote about RIG it was a BUY recommendation.

To your question, my statement about RIG is simply a reference to the fact that Transoceans deep oil drilling are generally huge CapEx projects. Thus, with oil trading in the low $40's quite a few if not all of these projects are no longer profitable. I have seen estimates that these projects require up to $70 per barrel price in order to make money. Furthermore, companies looking to drill in deep water with RIG are likely going to need to raise capital (through debt) for these hugely expensive outlays in a credit market that is sluggish at best.

So, while I agree with you that when the price of oil recovers, (which I firmly believe it will) RIG will be a great stock to own and hold. However, I stand by the fact that RIG is highly susceptible to low crude prices because companies will not rent drilling rigs from RIG if they are not going to make money for their efforts. In my eyes, its that simple. Appearantly, Mr. Market agrees as the stock is off more than 70% in the last six months (back then the price of oil was $100 more).

Does that makes sense? Agree/Disagree?


On Dec 22 02:45 PM David White wrote:

> I am curious where you came up with the statement that "RIG is especially
> susceptible to the declining price of crude." RIG has a $41B backlog
> of contracts for its rigs. It only has projected revenue of $13.5B
> for 2009. It seems like it should be almost immune to the declining
> price of crude over the short term. The crude price decline seems
> to be mediated mostly by the economic times. Most people are only
> predicting the recession to last for another year. Perhaps it will
> last another 2 years at worst (I could always be wrong). Still RIG
> should be fine. The price of crude will eventually rise because it
> is still in short supply over the long term. RIG should prosper for
> a long time to come. Do you actually have any facts to back up your
> statement?

Is Starbucks a Bargain? It Almost Goes Without Saying

Jason,

I agree with your analysis at $8 SBUX is a steal, and I think you humor makes you article a pleasure to read. I have added you to my watchlist. Thanks and cheers from a Starbucks coffee lover.

This Market Is One of Opportunity

tsinvest,

You missed the purpose of the price-to-peak earnings, this serves the to smooth erratic earnings results. It is a little known fact that corporate earnings are actually more volatile than stock prices, historically speaking. So, since a equity is a claim to all future cash flows and not just the next quarter's cash flow we think this smoothed valuation metric is more enlightening than just a standard P/E.

For a much better explanation of why price-to-peak can be a valuable metric check out that link to John Hussman's website above.

Thanks.


On Nov 11 01:23 PM tsinvest wrote:

> 11 P/E could rise if earnings drop over the next few months. As
> a result, stock prices would have to drop to give us an 11 P/E Market
> Opportunity again. I guess my point is P/E's move - they are not
> static.

Value Investors Could Do Far Worse Than Apple

TimboM: Thanks for your advice, but I get paid by the word. Its all about dragging out conclusions and running in circles in the blogging business. Haha, just playing...thanks for reading.

Sentiment and Valuation: Little Not to Like in This Market

Smarty_Pants: You point is also well received. You are correct that the statistic used when discussing the price to peak earnings multiple is only referencing about 20 years, which has been a relatively steady bull market, and thus may not give a full representation through bull and bear markets. Just to point out though, there have been extremes in this valuation metric during this time as price-to-peak got up to 34x during dotcom and low teens in the early 1990's...

However, I should have been more clear in stating that I was referencing only data since we began publishing our newsletters, which just happened to be the beginning of the extended bullish run. I was not trying to select a period that would distort the facts. I think it is relevant that price-to-peak has fallen so far, so fast. Almost certainly more relevant than comparing the current recession to the depression of the 30's.

Anyway, thanks for your comments because after all, that is what forum's like seekingalpha are for...comparing and discussing differing view points.

Sentiment and Valuation: Little Not to Like in This Market

Roger Knights: You are absolutely correct and I have changed it in our blog at blog.ockhamresearch.co... but I cannot do much about where it has been republished around the web. I apologize for any confusion. Thanks for catching that slip.

OM Group: Worth the Wait for Patient Investors

jimmy46,

Beta

What does it Mean? A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.

Also known as "beta coefficient".

Investopedia Says... Beta is calculated using regression analysis, and you can think of beta as the tendency of a security's returns to respond to swings in the market. A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock's beta is 1.2, it's theoretically 20% more volatile than the market.

Many utilities stocks have a beta of less than 1. Conversely, most high-tech Nasdaq-based stocks have a beta of greater than 1, offering the possibility of a higher rate of return, but also posing more risk.

www.investopedia.com/t...

Microsoft: Still Master of the Operating System Domain

AppleFinland--Please provide a link for your supposed information where Mac is out selling PC's 4 to 1. So percentage-wise you claim that Apple is selling nearly 80% of the computers sold? That has never been the case, ever. Perhaps you are referring to sales growth?

From the 8/21 WSJ article titled, "Microsoft Enlists Jerry Seinfeld In Its Ad Battle Against Apple"--"Apple's Macintosh computer business is dwarfed by Microsoft's share of the PC software market, but it has been gaining on its larger rival, accounting for 7.8% of new PC shipments in the U.S. in the second quarter, compared with 6.2% during the same period the prior year, according to research firm IDC. The vast majority of the rest of the market is made up of Windows PCs."

Starbucks Wakes Up, Smells the Coffee

That chart comes from our actual SBUX research report at the time of this article.

Kimberly-Clark: Absorbing New Markets

I like your analysis, and I agree KMB is a well run company with little downside risk. I am long on KMB for the long term.

One question: With a stronger U.S. dollar you refer to as a help for input prices, does that impede on the potential for growth overseas as KMB's products cost more abroad? Just food for thought because I think the company is on the right track no matter what the dollar does.