Seeking Alpha


Send Message
View as an RSS Feed
View wdchil's Comments BY TICKER:
Latest  |  Highest rated
  • Oil Markets For Q3 2015 - Where Are We Headed? [View article]
    Energy Value,

    Wow, this is the article I have been looking for! I am bookmarking it so I can review it in more detail again. Fantastic article!

    The prediction of parity in about 12 months is more optimistic than I have heard even from some stronger producers (e.g., XOM) but I suspect that they have ulterior motives - they want to see their competitors cut exploration and they would like to get good deals - such as what XOM is doing in the Permian. Your prediction seems quite reasonable although I have to admit that my own understanding of all this has a huge uncertainty factor.

    If you are correct then companies like DVN represent an incredible value right now. Companies like DVN and COP have presented plans that enable FCF to dividend/buyback parity with oil in the $60-70 range and can maintain their dividends if that occurs within 2017. This seems quite likely to me and your article suggests that even their plans may be pessimistic - again they may be trying to discourage investment by other entities.

    The caveat of course is the uncertainly in projections and timing for each respective region of the world. Clearly the North Sea and other big offshore projects are seeing rapid pullbacks in capital spending. Where I see uncertainty is the fact that the longer term exploration is being cut, so when this really begins to impact global production is a question. Shorter term completions have kept production rising, but you can't keep having shorter term completions if exploration goes away.

    So the bottom line - I agree with the conclusions but still feel some uncertainty as to the exact timing. As long as the timeframe is not too long then stocks like DVN will prove to be a great value.

    Oct 4, 2015. 04:06 PM | Likes Like |Link to Comment
  • Starbucks: My Mind Says Sell But My Heart Says Hold [View article]
    Buy and Hold, I tend to know how you are going to respond (to an article like this) but like reading it anyway. Your discipline has certainly paid off! The principle (that you present) is right. When you have a company that has a way of generating a high return on capital, long term holds tend to do much better than the traders. The traders are right about 50% of the time and the friction of trading loses money. Anyway, I appreciate your comments because they remind me of the right way to look at investing. WD
    Oct 4, 2015. 01:18 PM | 2 Likes Like |Link to Comment
  • Time To Consider Exxon Mobil [View article]
    Arie, I agree. XOM is my largest oil and gas position and so I am letting the dividends buy more shares for the time being. XOM seems very safe. I also think that OXY is very safe due to the ultra-strong balance sheet.

    One question - what is your view on COP and its ability to weather this storm and keep paying the dividend?

    My own view is that the COP dividend is safe as long as oil is north of $60 by 2017. I think the likelihood is high for that because the affects in the dramatic downturn in exploration spending (roughly a drop of $150 billion per year) will become visible by 2017 but is not yet being fully internalized by analysts. But such is a very complicated issue.

    Anyway, I love your articles and careful analysis.

    Oct 3, 2015. 03:41 PM | Likes Like |Link to Comment
  • Dear Tim Cook, Amazon Just Banned Your Apple TV 4 [View article]
    " is illegal to leverage an existing monopoly to expand market share..."

    I haven't seen the case law as it applies to retailers. Your statement above is a bit broad - I think antitrust law tends to be more specific to certain anticompetitive actions such as tying arrangement (which should not apply here). There is clearly no legal requirement that a retailer carry all competing products in a given category. But they apparently responded to quash their competitor. So this one may be in the gray area?
    Oct 3, 2015. 12:43 PM | 20 Likes Like |Link to Comment
  • Berkshire Hathaway And Playing Devil's Advocate [View article]
    BUFFETT222 - You may be right - in 50 years it might be a massive downside, but for BRK it is the time value of money. GEICO will have decades of making money before that is realized while at the same time its importance in the BRK empire slowly decreases. A much bigger issue is how the insurance business will be run after Buffett leaves. Buffett has maintained a very conservative stance in underwriting, and I hope his successor does the same. I will be looking very closely at how things change as he releases the reins (at some point). WD
    Oct 2, 2015. 09:42 AM | Likes Like |Link to Comment
  • Retirement Strategy: Tesla Has Low Horsepower For My Retirement Portfolio [View article]
    RS, As is usual, I whole-heartedly agree with the premises of your article.

    One thing to keep in mind. TSLA has basically declared their patents to the public to encourage EV vehicle investment. With the large number of automakers out there including government-sponsored ones in South Korea, it is only a matter of time before TSLA's cars get knocked off. It is just a matter of buying the car and putting a team of mechanical engineers on duplicating the chassis parts on a CAD system and using various metrology tools. Except for cosmetic changes to the exterior the design would be almost identical.

    So if TSLA's technology is that disruptive there will likely be knockoffs from all major automakers. And companies like Honda will undoubtably add their own improvements. So TSLA will "own" this market only for a short while-I would guess 5 years or so. Likewise I don't think there is much intellectual property in the battery technology either. Those will be low cost commodities. The most efficient manufacturer will win.

    Oct 2, 2015. 09:33 AM | 1 Like Like |Link to Comment
  • Big Oil And The Art Of Bottom Fishing [View article]
    Yes, COP should be compared with large independents such as DVN, EOG, APA, and OXY. Actually OXY may be in its own category relative to these since it is building up its midstream and chemical businesses.

    Also including COP data inclusive of before and after spinning off PSX is erroneous without substantial footnoting because PSX was such a large percentage of the company.

    Oct 2, 2015. 09:19 AM | 3 Likes Like |Link to Comment
  • Berkshire Hathaway And Playing Devil's Advocate [View article]
    Regarding Geico and self-driving cars:

    (1) Geico is a relatively small part of Berkshire Hathaway-certainly well under 10%
    (2) Cars will still need insurance-so any impact would be some fraction of less than 10%
    (3) Self-driving cars en masse are probably decades away

    So I don't think that is a significant factor. Regarding Buffett's age, BRK is currently priced at 72% of "fair value" which is based on the value of the investments and operating companies. Thus a loss of the leader would be an opportunity cost for the future but would not reduce the intrinsic value of the company.

    I consider BRK to be an above average investment now but already own enough.

    Sep 29, 2015. 12:01 PM | 9 Likes Like |Link to Comment
  • ConocoPhillips - Time To Buy [View article]
    CRUSHEDBYOIL: Sorry about my slow reply. I don't know anything about a potential lawsuit. I probably won't buy Hess because I prefer a bond rating of A- or higher and I don't see the bargain factor as sufficient. OXY is a much more conservative investment and I love its Permian assets.

    MTTMARTIN: As a percentage of the company, I most like the DVN asset mix. The ownership in the Permian and Eagle Ford is particularly high quality and I like all the other assets as well. My biggest concern is how the company will fare in 2016 and the BBB credit rating. My feeling is that DVN will come out just fine and prove to be an incredible bargain. But compared to OXY and XOM the risk is much higher. Compared to COP the risk is moderately higher because COP is bound to a high dividend payout which is less of a liability to DVN. But overall oil and gas is probably less than 8% of my overall portfolio and it is weighted toward the lower risk players, so I am not feeling anxious.

    Sep 28, 2015. 01:13 PM | Likes Like |Link to Comment
  • ConocoPhillips: More Pain For Canada [View article]
    I hate to see these assets sold at a "fire sale" but perhaps it isn't that bad.

    Regarding the dividend I think that $60 oil by 2017 is very conservative and therefore think the dividend is probably quite safe. Based on some recent reports I have seen the WW decline in oil production capacity including the US and factoring in a precipitous drop in exploration is likely to be a bigger factor than most investors realize. I have been trying to understand why this is the case. I think that the difficulty and uncertainty in computing WW oil production capacity is masking the decline - it is a signal to noise ratio problem. I suspect that the effects of the decline and lack of exploration will become much more apparent within two years time. Also, companies like XOM and COP have a much clearer and accurate perspective than analysts at large but for strategic reasons they have to keep that analysis confidential.

    Sep 28, 2015. 12:59 PM | 1 Like Like |Link to Comment
  • The Risk Of Buying Dividend Growth Stocks Without Looking [View article]
    Dale, That is a great list. I have 5 of those 15 as direct holdings and all of them indirectly. WD
    Sep 26, 2015. 11:28 AM | Likes Like |Link to Comment
  • ConocoPhillips - Time To Buy [View article]
    I am looking at Hess. It has a 2% yield and a BBB credit rating. I owned it a long time ago but not recently. Based on historical cash flows it may be more undervalued than OXY but the risk is also higher.

    I currently have XOM, COP, OXY, and DVN in the oil sector and probably won't add any more for the time being.
    Sep 22, 2015. 11:29 PM | Likes Like |Link to Comment
  • Johnson & Johnson: A Gold Standard Dividend Stock [View article]
    "I believe a breakup of the company would do that to release more value and I have been debated about that in the past by co-shareholders."

    That seems to be the "standard answer" and it is just as wrong now as always.
    Sep 22, 2015. 11:23 PM | 5 Likes Like |Link to Comment
  • ConocoPhillips - Time To Buy [View article]
    COP is a hold for me. I just bought a modest position in OXY. It has a AA- bond rating and is investing more than 30% of its CAPEX in the Permian. It also has midstream and chemical businesses.
    Sep 22, 2015. 11:54 AM | 1 Like Like |Link to Comment
  • Exxon Mobil Has Ample Firepower To Make The Mother Of All Acquisitions, But Will It Happen? [View article]
    XOM is quietly making favorable deals in the Permian. That seems like a much better plan than attempting some big acquisition that would attract the scrutiny of regulators. One basic deal is structured whereby XOM takes over production costs and then gives back a third of the proceeds to the partner (from a recent article I saw). Of course I am sure that they have other deal structures as well. This tends to be a win-win for stressed companies.
    >The weaker company gets rid of a negative cash flow situation but still gets to profit in the future.
    >XOM gets most of the profit from the deal with no capital cost and, for them, a pretty minor increase in cost.
    The longer oil stays low, the larger will be XOM's position in the Permian - which is a great long term investment.
    Sep 22, 2015. 11:18 AM | 14 Likes Like |Link to Comment