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ConservativeOutperformer

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  • Oil Doomsayers Were Wrong In 2009: 4 Reasons Why They Are Wrong Now [View article]
    Sure, but what about these other names that will see their economics improve considerably when prices swing back?

    People are looking at a company and trying to figure out how it changes when the industry economics change. They should be looking at it the opposite way..... When the industry economics change, which companies will benefit the most? Drillers could do well (prices of these equities could increase quite a bit), but there are other pockets of the energy space which will do considerably better (prices will double, triple or quintuple).

    There have been considerable improvements on the cost side of the equation for onshore drillers. Depending on the basin (and even specific formations), it's easy to envision a scenario where certain drillers become wildly profitable if the prices get back to 'prices that make offshore drilling attractive'. That's my point....... You might make a little money if offshore drillers rebound. You will make a lot of money in other energy names if that happens......

    Good luck!
    Dec 17, 2014. 12:15 PM | 1 Like Like |Link to Comment
  • Oil Doomsayers Were Wrong In 2009: 4 Reasons Why They Are Wrong Now [View article]
    People keep talking about MDR like it's some fantastic opportunity.... Deep water drilling doesn't make sense anywhere close to these prices, especially when there are still plenty of land plays out there. The economic realities are why you don't see a name like MDR rally hard on a day like today when some other small cap names are up 20%.

    I've been researching energy stocks for the last few weeks and offshore drillers are the least attractive assets right now. Why buy these stocks at 75% off when I can buy onshore E&P names operating in Eagle Ford with breakeven prices under $60 that are also down 75%? Some of these names are hedged out for a few years as well.......

    Keep looking. There are plenty of bargains out there right now in this space. MDR, SDRL, et al are not that attractive............

    Good luck!
    Dec 17, 2014. 11:57 AM | 1 Like Like |Link to Comment
  • CARBO Ceramics: Just How Cheap Is Cheap? [View article]
    Came across CRR when looking into ROSE...

    Although this is a great article, it is far too long. Too many details, and far too many words about those details, that probably aren't material to the decision making process..... In any event, I agree with the author that CRR will face quite a bit of trouble over the next 12 months. Even if Crude prices don't deteriorate from here, the simple economics behind exotic proppants vs. sand aren't painting a rosy picture. As companies look to save money, this will probably be one of the first areas they turn to.

    CRR looks good from a financial perspective, but it does seem more than reasonable to expect their financials to sour. The income statement will probably soften and once it does the balance sheet will sour. I think $20 is too low, but I could be wrong. I looked at this company as a short candidate based purely on fundamentals. Then I looked at the stock price and realized I already missed that trade......

    Good luck!
    Dec 17, 2014. 11:04 AM | Likes Like |Link to Comment
  • How Long Does A 'Typical' Oil Downcycle Last? [View article]
    The most important thing is missing from this article..... an overlay of oil equity prices against those other charts.

    Good luck!
    Dec 16, 2014. 10:14 AM | Likes Like |Link to Comment
  • From $16 To $60? Where's The Magic Wand For Caesars? [View article]
    After a big drop in the casino operators valuations YTD, it's apparent the market is predicting a recession or material declines in visitation to casinos..... Since I just got back from Vegas, I'll provide a few observations from the front lines........

    Plenty of action in and around the PH/Paris areas and things seemed to be fine. The Flamingo is still a dump, but plenty of activity (even more smoke). Harrah's didn't seem to have much going on. The surprise of the trip was how dead Caeser's Palace was. Saturday night, from 11 to 1, literally dead. Shops, tables, corridors. No one. It was very, very surprising. It was remarkable to look at the amount of money going into sustaining the operation, to how little action was actually taking place.......

    Upon returning, the first thing I wanted to look at was Caesars. According to the Bloomberg article today, they're contemplating skipping a bond payment....... Coupled with what I saw, this looks like a fantastic short opportunity even amidst the recent declines..... I don't see anything, from a qualitative or quantitative standpoint, that makes me think the business valuation will increase any time soon. Throw in an impending market sell-off and this thing looks ripe for huge declines.... Probably all the way to 0.

    Good luck!
    Dec 16, 2014. 12:37 AM | 2 Likes Like |Link to Comment
  • The Importance Of Return On Capital [View article]
    I wish more people could draw this distinction. It would eliminate a lot of the crazy dividend, or as the first poster said the 'return of capital,' crowd.... The, 'Apple is using their cash wisely' crowd. After letting their share price rise a few thousand percent before engaging in meaningful share repurchases while the asset they are using to borrow against made 2% a year for the last 7.....

    There are some great businesses in your list, like Ross, because they really are deploying every incremental dollar at high rates of return. For younger investors, these are the types of businesses that will be monsters for years to come......

    Good luck!
    Dec 13, 2014. 12:20 PM | 2 Likes Like |Link to Comment
  • Penn Virginia: Too Cheap To Ignore [View article]
    TIM,

    How do you feel about the Railcar manufacturers? I've been reading up on some names after looking through the Baytex presentation. They lay out a compelling growth story for transportation by rail..... A doubling of shipments in only a few years. Even if Keystone and/or other pipeline projects are approved ahead of time, there will still be considerable demand to move stocks south. I look at it as a play on the WCS/WTI spread.

    GBX should do well even if Oil goes lower.... Am I nuts?

    Good luck!
    Dec 11, 2014. 02:34 PM | 1 Like Like |Link to Comment
  • Penn Virginia: Too Cheap To Ignore [View article]
    Been digging into these names for past week. Plenty of names out there to avoid. This one goes into the potential buy category.

    Figure out how much exposure you want to the industry. Divide that by monthly or bi-monthly purchases for 5 - 10 months. Buy every month (or every other month) until your exposure is comfortable. Pick 10 of your favorite companies, spread the wealth.

    For me the numbers are easy. $10k a month for 10 months divided between 10 names. Should be hard to miss 'the bottom' doing that......

    Good luck!
    Dec 11, 2014. 10:37 AM | 2 Likes Like |Link to Comment
  • The Apple Watch And Its $11 Billion Impact On Earnings In One Year [View article]
    I'm not seeing $11b. I'm thinking more in the range of $11.213560458b and $11.213560460b. It's a little too early to tell, but I thought about it for 3 minutes and narrowed it down based on my estimates.....

    Good luck!
    Dec 9, 2014. 10:13 AM | 4 Likes Like |Link to Comment
  • Don't Rush To Buy Depressed Oil Stocks - They Are Likely To Come More Cheaply Later [View article]
    Everyone writing about these oil stocks keeps saying to wait...... While never discussed, the prospects for significant share price appreciation are strong considering the monumental sell off in some of these names. PWE was a $10 stock in July...... Here's the most important thing...... PRICE!

    The price is down 75% since July..... Some of these companies might go bankrupt. Most won't. Buy a basket of the ones that have fallen the most and wait 5 years. Even if you buy 10 and 3 go to zero, 5 will double or triple and a few others will return over 50%.

    You can wait another 5 years and not see an entire industry suffer enormous price declines like oil has. The last one that did, banks in '08, has recovered. Names like RF, BAC and others that suffered the most have appreciated the most.

    The point here is the prices today are a lot closer to the bottom than the top and everyone sitting around writing and watching will look back and talk about how they were right.... Except they will have missed making all the money.

    Investing takes courage. Don't be the watercooler guy at work that's right all the time with no money.... Grow a pair, buy when prices are low and the outlook is bad. If everyone was doing it they'd all be rich and fantastic investors. They aren't.......

    Good luck!
    Dec 9, 2014. 10:07 AM | 4 Likes Like |Link to Comment
  • Update: United-Guardian's Dividend Cut Raises Questions [View article]
    Butters outlined a lot and I would summarize with the following.....

    If you believe in the October comments of the last conference call the short term issues could be just temporary. If you do not believe the October comments, then the company has further issues.....

    Either way, this is a profitable business. It's been profitable for a long time. The dividend is certainly propping the price up, but over time they've demonstrated an ability to generate large returns on capital and disburse those profits as dividends.

    Investing is all about the price you pay. As UG declines it gets more attractive for long term holders. Under $20 you're looking at a $90m company with $10m in cash that made roughly $4m in 2010. It's not the best bargain on the planet, but if you think they can sustain $5 or $6m in NI at some point in the future it looks like a solid buy....... If you think they'll make $4m for the next 10 years you make 5%.......

    As I mentioned in other posts, under $18 I think there are solid gains to be had for long term holders......

    Good luck!
    Dec 3, 2014. 12:42 PM | Likes Like |Link to Comment
  • They Say The End Is Near: It's 2004 All Over Again For Coca-Cola [View article]
    The problem with these pro-KO articles is they are not addressing the real problem.... KO as an investment has very little chance of 'substantially beating the market'. Looking in the rear-view mirror is a bad investment thesis.

    Even using your example, if you bought KO at it's high point in 2004 you have underperformed the S&P...... Sure, if you waited for a pullback down to $20 that year you have done well (barely better than the S&P). But that's not what is being advocated here. We are at an all-time high, no growth in its core business, extremely elevated multiple and questionable management actions. The management stuff will go away, but are people betting on KO acquiring their way out of this (like they did with MNST)?

    Also keep in mind, however, that in 2004 KO had increased earnings 50% over the previous 5 years with a recession in the middle. Fast forward to today, on the heels of a raging bull market, and??? Earnings are up 50% since 2008 and virtually flat for the last 3. Going forward it looks like they could do 6% a year in EPS growth, mostly with increased buyback activity (which is fantastic for long-term holders). But, who would pay 20-25x for that business? I can buy companies growing 15% a year for roughly the same price....... In 20 years one could look back and see a company that looks like KO today, but I digress..... It could be argued, all the issues with KO in 2004 were due to foolish naysayers asking 'why hasn't the share price moved in the past few years'? Keep in mind, KO was coming off an astronomically high P/E in the late 90's that guaranteed the price would decline over time.

    All of this is observed without even addressing the real issues this business faces.... What kind of future do CSD's have? What is the risk associated with investing in KO? Is this business really 'recession proof' as it has been in the past? What kind of economics do Simply Orange and bottled water carry to offset changing consumption habits? These questions are dangerous for a company priced where it is......

    Decent returns can be had here, but this doesn't appear to be a 'no lose' scenario. Most of the gains will be due to buybacks and dividend increases, which is fine..... For awhile. Core business growth is necessary to move the needle for a $200b company. I just don't see how people are expecting anything around 10% a year here. What is 'The Margin of Safety'? It doesn't pass the smell test................

    Good luck!
    Dec 2, 2014. 05:13 PM | 8 Likes Like |Link to Comment
  • I Wouldn't Get Used To $65 Oil [View article]
    Anybody with a brain can see there is serious overreaction in this space. Look at some of the performances here...

    SU down from $41 to $31 in 3 months
    PWE down from $9 in late July to $3.30 today
    BTE down from $44 to under $20 in 3 months
    SD, XCO, NFX, LINE, SDRL, RDC, etc etc

    Most of these moves down were on top of huge declines in the previous year(s). The key is to figure out which of the names is the right one to buy...... Some of these swings are enormous. XCO moved down from $4.50 to $2.20 then up to $3.80 right back down to $2.60 in less than 3 months......... People are very confused as to what the true value is for these companies.

    The key here is to figure out which equities have moved irrationally. If you have time and money it's a very exciting time.....

    Good luck!
    Dec 2, 2014. 04:27 PM | 1 Like Like |Link to Comment
  • Update: United-Guardian's Dividend Cut Raises Questions [View article]
    Ken, if that's really you, thanks for writing in. Feel free to ignore articles and authors like this that focus on short term issues.... The long term holders of this stock understand what you have done.

    Keep up the good work!
    Dec 1, 2014. 01:33 PM | Likes Like |Link to Comment
  • Black Friday deals draw the crowds [View news story]
    The sudden drop in gas prices will probably mean even better numbers than people are thinking.....
    Nov 28, 2014. 07:43 AM | Likes Like |Link to Comment
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