Nathan Rothschild is reputed to have said that "the time to buy is when the blood is running in the street". The value of British Petroleum's common stock has fallen about 70% since the explosion, fire and subsequent loss at sea of the Deepwater Horizon which left 11 able, good crew dead and an environmental mess which continues to unfold. The question at hand seems to be "is a 70% discount blood in the streets?"
British Petroleum's stock is at a 13 year low today. So is a 13 year low "blood in the street" or one of those dude-in-the-street-with-a-sandwich-board-dat-sez-"everything must go 70% off"-that said "50% off" last week-and will say "85% off" next week-kinda deals? That is a question I cannot rightly answer but I do suspect that BP has a buyable look about it. A 70% near term discount strikes me as a "decision height" opportunity...i.e. the bottom may be near so "you gonna'pull that pistol or whistle Dixie".
I thought for a moment about giving a detailed, erudite, logical and persuasive argument to buy British Petroleum's common stock but in this case I am going to spend my time opening a position and preparing to buy more on any serious dips. The time for shooting appears to be close at hand and if it ain't there is plenty of room to shoot more later.
CAVEAT: I do not believe in unconventional offshore petroleum and have bet predominantly on unconventional onshore natural gas.
However, years ago I took long positions in Keppel Engineering and Sembcorp Marine.
Not a fan of the deep water but at one point in the past was aware of the permitting situation.
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Hell no. they will fold. It's like buying Enron on the decline.
ReplyDeleteI admit that it is strictly a speculative investment. However, I think comparing BP's possible negligence to Enron's outright criminal fraud might not add up. Too, BP has proven to be a cash machine in the past and has survived two World Wars, one Great Depression numerous recessions and more recently a dust up with Mr. Putin's people.
ReplyDeleteBesides, it is politically unacceptable for BP to be driven out of business. Why? Because the people who determine what is politically acceptable cannot make good on their own oil spill promises without access to BP's money.
A simple equation, really: no BP=no BP money. If such a situation comes to pass, the gaze of the mob will cast about in search of another scapegoat. Where it will settle...or be directed to settle as the case may be...would probably be on the next biggest fish in the food chain which in this instance may very likely be Mr. Obama's White House and that bunch has the look of broke crackers about it.