There are a boat load of high quality company stocks out there yielding 4% or more.

Best Yield to risk ratios I have seen in 5 years

The Hong Kong market is bargain territory now, you see lot's of companies trading for absurd valuations right now. Way cheaper then any other market. Some 2009 level of cheapness.

had a look at ICBC a while ago, trading at P/E 4.6, do not understand it at all

yeah i would stay away from banking. Real estate, simple manufacturing certain services etc are where you need to look. And if it smells even remotely of fraud stay away as well.

You are talking about dividend yields, yes?

In this particular case I am following MyrnaFTW and trying the strategy of filter for stocks that are still near their 52 wk highs after a market crash, have palatable balance sheets and appear to not suck or have anything particularly dubious, and just let them run. I have a stop limit set for it, but so far it's up over 15% since I got it.

CF is in no brainer territory.

I own the stock but leveraged up by buying jan 17 calls at 55 for 4.00 and then selling may 60 calls for 1.50.

Even if inversion doesnt go through they should be close to $6 in fcf once newbuild is done in next 6 months. If the inversion is allowed its closer to $8.

Really no strong bear arguments to make.

The inversion (agree that it should go through) is a bit special in that it won't lead to the normal tax benefit.

https://www.mayerbrown.com/files/Pub...dance_0914.pdf

Unless I am missing something of course.

CF has guided that they will be paying the 20% tax rate of Britain. Most of the 500mm synergies they talked of derive from that. if they dont get tax savings the deal wont go through

Forgive my laziness, but aren't revenues declining. Why should it be worth 10-12x earnings? What if gas goes up? That would squeeze margins. Most producers are not making money at these gas prices, even the low cost Marcellus and Utica guys. If you do some math on rig count, production declines, new well production and just look at general growth of production this year you see that these prices are not exactly sustainable.

Stocks like CHK BXE or RMP could be nice hedges. They are large gas producers that are pretty cheap right now. Especially BXE as they have one of the lowest cost gas fields in Canada.

Just some random thoughts, but thanks for the idea.

gas costs arent going up any time soon. Last time gas was over 4.00 there was a 10% supply growth response within 1 year. Gas guys make money at 3.00 in all the places you mentioned, read through the gas guys presentations. Theres also a permanent 5.00 difference between NA gas and euro gas for a long time as thats the cost to LNG export. LNG is the only release valve to NA gas.


edit on your edit: ya I own bxe and though of it as a nice pairs trade as well. but I still believe that 5$ gap will always remain unless shale gas takes off in europe or asia. so 4-9 type spread will be permanent

That part will work for future profits. They just don't get some of the other tax benefits because they are over the % ownership threshold. It is boring and complicated.

They obviously already would be aware of this.

oh I see what you're saying. Yeah agreed, and that increases the odds of the deal going through

If gas averages 3.5$ isntead of 2.7$, that will increase gas costs by 30% and gross margins somewhere in the 20-25% range?. It seems you get 6$ in earnings by annualizing Q2 earnings this year with average cost of 2.67$.

3.5$ gas will cut earnings by about 3-500m$. Which would make the stock less mis-priced as it seems to be now. Which would put normalized earnings estimate between ~4-6.5$. I guess on the cheap side still if you add in buybacks.

Only the low cost guys make money at 3$, but not that much. The problem is that marginal suppliers set the price. A lot of low cost players have indicated that they will not expand production much beyond where it is now if gas doesn't go to at least 4$ (especially given the levels of leverage already).

So if they don't grow, and the marginal producers who need 4$ gas, decline then that will keep prices between 3-4$ at least. With decline rates of 50-70% the first year, current amount of rigs are not sustainable to grow production (only to keep up, while conventional and older non conventional wells are declining):
http://www.eia.gov/petroleum/drilling/pdf/dpr-full.pdf

The Cheniere terminals will come online in 2016 and 2017 with 2.8bcf/d total (vs 90bcf/d in total NA demand). Which is 3% of North american demand. That is almost guaranteed, then there is another 10bcf/day potential between now and 2020 in terminals.

Add in coal plants ( gas equivalent of 3bcf/day going offline in 2015 and 4.5bcf/day going offline in 2016/17, most of it directly converted to nat gas), and the huge capacity growth in nat gas intensive industries, I don't see how gas can stay below 3$. The market is clearly saying that it needs at least 3.5-4$ in nat gas to grow net PDP resources and production. The fact that a ton of smart insiders in the gas industry are buying shares hand over fist sort of seems to confirm this.

But I suppose in the short term prices can stay low.

Just my 2 cents .

im not going to go into most of that because pretty much all your assumptions are wrong. they had hedges or purchased gas for Q1 and Q2 inventory at much higher prices than spot was during that time. You also cant annualize any quarter because its very seasonal. And they are finishing up a major expansion in the next 6 months so profits will rise accordily

That Amaya short looking ayight...

The bear case is that nitrogen fixing goes* the way of other commodities. More capacity from them certainly isn't bullish on the price they will receive.

See potash and phosphates producers for how this could go bad.

*keeps going

I usually won't give my opinions here , but I'm pretty confident in saying that if we don't recover in the next couple days we can see a 10% drop in the markets by the time earnings season is over. Personally. I think to go flat or hedge for a month is the play now.

This is what im thinking too. Way too many indicators are down for economy. Couple that with outside factors, the public seeing the market as "volatile" and "overvalued ", any little thing will tip this thing over.

Look at what happened to health care today! Huge irrational overreaction.

Will be interesting to see how the recent Ichan video goes over tomorrow.

Ahnuld, have you done an ask me anything? Would you consider it?

That Amaya short is printing money

ya about 1$ away from covering amaya. It has more downside but id like to see results continue to suck before targeitng a mid teens price. If it drops again tomorrow into 21 and change ill cover and reestablish if it bounces.


Also close to rebuying POST. still a great company, just was priced as if avian flu was a non event when clearly it will have impacts until late next year. The interesting thing they did there recently is clean out their bank debt by issuing 7-8% yield paper. They can buy that back in 2018 for a reasonable price (104 I believe) so theortically it wont cost them that much as they become a better credit. But it does give them about 2 billion in acquisition capacity on their bank line. so after the equity raise they are only going to do about $4 per share in fcf next year but if you go pro forma a 2 billion debt funded acquisition it gets back to $5 or even a bit higher. Anyways all that to say a few dollars lower it becomes attractive again

eh, would rather stick to stocks than personal info. Ill do another stocks I like thread later this year.

Yeah that can't come soon enough. I didn't tail anything you did last time but really enjoy all the discussion that came from it.