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threeleaves

threeleaves
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  • American Airlines Can't Buy Stock Quick Enough [View article]
    I do not think it prudent to rule out a close correlation between jet fuel and crude, especially Brent. International refining capacity is abundant. Domestic capacity is obviously more challenged, but refineries are adjusting and expanding to take on more light crude as the margins are there.

    The complexities and bottlenecks in the refining business are important and should be paid attention to. But the main theme here is that the U.S. imports dramatically less oil than it did just a few years ago, and that domestic production will continue to rise over the next decade. This puts pressure on international crude benchmarks which in turn puts pressure on the price of refined products. If brent jumped to $150 over the next few years, domestic jet fuel would jump with it as domestic refineries have the option to export their product in line with international refineries. My thesis is that because of domestic crude production, the likelihood of Brent rising to $150 in the next decade is low--keeping jet fuel prices in check. . . . I worry about deflation in oil commodities than inflation.
    Aug 1, 2014. 05:25 PM | 2 Likes Like |Link to Comment
  • American Airlines Can't Buy Stock Quick Enough [View article]
    I was short airlines in 2010, 2011 and made money. But it was the stupidest speculation I ever made in the stock market, and I consider myself lucky to have gotten out unscathed. In 2012 I reversed my position, covered, and have been building long positions since that time. Part of my long thesis hinges on historical negative sentiment (e.g. Buffet, DeepValueLover, myself). The negative historical sentiment will always cause sharp selloffs from time to time which I see as a healthy necessity for long term price appreciation. It's the classic wall of worry. As far as oil price volatility goes, I think DVL has it dead wrong. Among the fundamental shifts in the industry that people have enumerated, the oil price factor is among the most important. The massive quantities of oil coming out of the Baaken, Eagle Ford, and Permian make the surge in oil prices that we saw a decade ago highly unlikely to repeat. For the most part, I think the so-called shale revolution is under-reported and under appreciated due to the fact that Americans take low gasoline prices for granted. Stable $100 oil factors into many of my investment thesis besides domestic airlines. In short, I think meaningful oil price volatility is over for the next decade. When trouble arises in the middle east or Russia, you will see short term spikes, but they are meaningless in my opinion. I also think Delta's access to domestic crude via their refinery is underestimated in terms of their competitiveness with other airlines including non U.S. carriers, although possible lifting of the export ban should be watched out for--even though people seem to differ on its possible effects.
    Aug 1, 2014. 12:46 PM | 1 Like Like |Link to Comment
  • Dick's Sporting Goods Expanding Rapidly [View article]
    You mention share buybacks, and management has touted them for awhile now, but share count has risen or remained steady. So they are basically buying back shares then issuing those shares directly to themselves.
    Aug 1, 2014. 09:00 AM | Likes Like |Link to Comment
  • Apple Continues To Bleed Market Share [View article]
    My only gripe with Apple is that they caved to activists when the stock was near $400. In early 2013 the negative media frenzy was at such a heightened pitch that the stock could have easily floundered to the low $300's. All Apple had to do was keep their mouths shut and let it happen. They missed an opportunity to buy tons of stock on the super-cheap, which would have bought them more time to address the most important issue which is new products. They could have even repatriated money for the buybacks if the prices were cheap enough. If you projected cash/share forward a half decade or so, a $300 purchase price would have been close to buying the company in exchange for cash with the bonus of a free business. That's how insane the negative media frenzy was. That sell-off was far more irrational than any irrationality surrounding apple's stock split and subsequent rise in stock price that the author takes issue with.
    May 4, 2014. 11:35 AM | 4 Likes Like |Link to Comment
  • Under Armor: The Best Sports Apparel Stock For Investors [View article]
    @saglimbeni . . . Yes, worrying about high multiples keeps many investors from buying great companies. But what worries me about UA, is your point about the next decade of growth. It seems like all the cards are in the right place for the company to continue to expand, but there is something about their marketing and heavy push for their brand image that bothers me.

    When they started selling shirts with those huge logos, it struck me as overkill. Maybe another company started that trend, but they really seemed to push it. It's an anecdotal concern, and possibly not worth much. But I just get the sense they are trying too hard to be the next Nike. It's obvious that they are engaged in a smart marketing campaign to ingrain their brand into the minds of young people all over the world. It might just work. But I also think there is a possibility Under Armour will market themselves so hard and fast that people will become bored and tired of it, and that in a decade they will be a forgotten brand. . . . It's been a great stock for many, though.
    Jan 2, 2014. 07:10 PM | Likes Like |Link to Comment
  • Miller Energy: Digging Itself Into Another Deep Hole? [View article]
    WRT: “Nobody else wanted to buy those assets anywhere near the price Miller paid, much less where they are valued by the company today,” he reminded. “They figured there was nothing highly valuable there (after estimating the size of the reserves and the costs associated with extracting the oil)."

    In December 2009, when the deal was made, Brent prices were in the crapper. And so were oil stocks. Furthermore, the world was still in the throes of the worst financial crisis in a century. There were plenty of assets on sale, and fewer bidders with less cash. Just sayin'.
    Dec 31, 2013. 12:31 PM | Likes Like |Link to Comment
  • Miller Energy: Faulty Reserve Assumptions And Poor Cash Flow Leave Little Equity Value [View article]
    The part of the proxy that has me interested is this:

    "Worse still, Miller has issued grants to its underperforming executives so that as of July 5, 2013, there were outstanding options and warrants to purchase up to 14,503,847 shares at an exercise price between $0.01 and $6.94 per share. If these warrants and options are exercised, total shares would increase by 30%. . . . This effectively means that the shareholders’ loss of value from such a massive dilution and decrease in voting power will be directly offset by an increase in the management’s and directors’ control. We note the curious fact that by our estimate if the management team were to exercise all their awarded options the aggregate ownership of all insiders will amount to approximately 51% of the voting power of all outstanding Miller shares."

    So . . . given the above statement in the proxy, can anyone here give some likely scenarios of how this plays out?
    Dec 17, 2013. 05:26 PM | 1 Like Like |Link to Comment
  • Miller Energy: Faulty Reserve Assumptions And Poor Cash Flow Leave Little Equity Value [View article]
    Interesting activity today. Proxy filed by group of large shareholders to replace board, taking aim at coziness with executive management. Excessive compensation, lining pockets, shareholder dilution, G&A expenses, etc.

    http://1.usa.gov/1bNZgU6
    Dec 17, 2013. 12:47 PM | 1 Like Like |Link to Comment
  • Are Energy Investors Rotating Out Of Shale Producers And Into Big Oil? [View article]
    Found this article on Bloomberg describing the role Platts Publishing has in Bakken price discovery.

    http://bloom.bg/1jAA2Ne
    Dec 8, 2013. 11:15 AM | 1 Like Like |Link to Comment
  • Are Energy Investors Rotating Out Of Shale Producers And Into Big Oil? [View article]
    Fear of domestic glut and bottlenecks. Fear of new production in Iran. Fear of weather. Fear of interest rates. Fear of Fed. Fear that oil will follow the footsteps of natural gas. etc. etc. etc. . . . . It's mostly noise, in my opinion. Fear of weather is my favorite. It's too transitory to have any teeth. Hopefully, shorts will pile in based on weather related events and production cuts that may ensue.

    This summer the Bakken and Eagle Ford could do no wrong. I think there was some over exuberance there. The sell-off is healthy and necessary for the space to move higher.
    Dec 7, 2013. 02:37 PM | Likes Like |Link to Comment
  • Abraxas Petroleum: $3 Energy Play Is Going Higher [View article]
    Global Hunter Securities raised their price target from $2.80 to $4, yet have a neutral rating! . . . Lots of fear in the oil space right now.
    Nov 7, 2013. 11:47 AM | Likes Like |Link to Comment
  • Energy XXI: Horizontal Drilling In GOM Results In 390% Organic Reserve Replacement Ratio [View article]
    Wouldn't it be more useful to back out the debt from your PV-10 figure? Doing that, I get something like $62.58/share for proved reserves. But then you also have income tax to figure in.
    Oct 21, 2013. 03:59 PM | Likes Like |Link to Comment
  • Esprit Holdings Already Priced For A Very Uncertain Recovery [View article]
    Interesting. I always wondered why they abandoned the U.S., especially since the brand was created in San Francisco, and especially since chinese consumers seem to gravitate towards western brands. All sorts of statements from their executives saying the brand has lost its soul. Gees . . . well, take the brand back to San Francisco and get it back. Duh. On a cultural basis, the bay area is one of the hippest areas on the planet, and richest. Seems obvious to me. I'm sure I'm missing something here, but there is plenty of mystique to draw upon in the bay area to build a long lasting and highly desirable brand.
    Aug 26, 2013. 11:50 PM | Likes Like |Link to Comment
  • Freeport-McMoRan: Low Free Cash Flow Yield Worth The Risk? [View article]
    Your article seems to conflate precious metals and industrial metals, which makes you seem ignorant of the subject you are supposed to have some authority over. Sorry, had to say it. I don't mean to be mean. . . . Also, you would have been better off leaving the topic of precious metals out of your article completely, for obvious reasons.
    Aug 25, 2013. 08:19 PM | Likes Like |Link to Comment
  • ConocoPhillips: Investor Update On The Safe Dividend, Venezuela, Libya, And More [View article]
    Michael . . . you could always sell OTM calls on your xom shares. If you get assigned at least you'll have sold at a higher price. If the share price stays put or declines, you can invest the premiums into COP. If you are very confident about your thesis of COP over XOM, in the long term, you should trust it, and gradually move the capital. Maybe do some math and figure out how much money you will lose if you don't reallocate the capital, and compare that to the cap gains taxes. I think it's a shame to do all the research and study you do, then not act on the knowledge. Just sayin'.
    Aug 25, 2013. 07:13 PM | Likes Like |Link to Comment
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