Found out my wife is a shareholder (it’s HER portfolio) and I never would have owned it because of “ethics”, but has anyone asked if Lloyds, or just who is carrying their insurance? I’d be willing to bet that none of these high risk ventures is uninsured, and that IS what put Lloyds in business.
The trouble is, pension funds are shareholders and although mine isn’t - I checked - it is affecting the markets in London in general regardless because BP is one of the UK’s (and world’s) biggest companies which meant it brought in a fair whack in tax-revenue and our new government is about to usher in a new raft of austerity measures…so it just doesn’t bode well.
So, even if one’s ethics had avoided these guys, one is still screwed. Oh joy.
By the way, we are intrigued by the way BP is being called by its full name, ”British Petroleum,” despite a marketing campaign a couple decades ago to just call itself “BP”. ‘Cos then it’s a nasty foreign company, of course. :-|
Imagine if BP had a middle name… ”British James Petroleum, you get your arse down here right now, your Dad is going to give you a right bollocking, I tell ya!”
Markets hate uncertainty. And you can make a fortune trading off that uncertainty (take John Paulson and David Tepper making billions buying beaten-down financials as a recent example).
Today, no company’s future is more uncertain than BP. The company’s oil spill is ravaging the U.S. coastline. Wildlife, fishermen, and the tourism industry are suffering as a result. Goldman Sachs estimates the total cost of the cleanup (including reimbursements to damaged businesses) at $33 billion. The stock is down from $60 a share to under $33 in less than two months. Credit default swaps (insurance against default) are up 120 basis points to 380 today – that’s up from 45 basis points in April.
Will BP recover from this catastrophe or will the liabilities prove too much for the English oil giant?
Energy investment banker Matt Simmons thinks the cost of the cleanup will sink BP. Yesterday, he told CNBC, “I don’t think BP is going to last – at least not for more than a matter of months.” Simmons is well respected by Wall Street. But he has a penchant for sensationalism (he says the best way to plug the spill is nuclear explosives). He also claimed Saudi oil production had peaked two years ago.
Other BP bears say the company will be forced to suspend its dividend, which costs $11 billion a year. The stock was down more than 15% today on fear of a suspension.
On the bull side, you’ve got fund manager Whitney Tilson saying BP is “just too cheap.” Tilson is taking the classic contrarian stance that things can’t get any worse for BP… Everyone is panicking, analysts are downgrading the stock, and the headlines are awful.
Tilson notes the company consistently earns more than $20 billion in annual profits. And the damages will be paid in pre-tax dollars. Adjusting BP’s annual earnings for taxes, the company earns roughly $30 billion a year – enough to cover the estimated cleanup costs. The company also has more than $8 billion in cash. Plus, efforts to maintain the leak are starting to work.
Tilson also believes BP will maintain its dividend (now at a juicy 11%). He says the company is one of the most widely held stocks in Britain, particularly among “widows and orphans.” Suspending the dividend would harm these people (and we know the government isn’t in the business of making the “common” man suffer).
How should you play BP? The truth is, we don’t know. But we do know that if BP survives, it will be trading at much higher levels in the next few years. And the dividend, assuming it’s maintained, is a great bonus.
You see how the system got all of us by the b@lls? That’s another reason not to buy stock. They goof, or are just plain reckless (they could be even more reckless than this) and you can’t punish them because it’s your money they hold hostage.
Government failed to ccontrol corporations. Now corporations control the government. It even surprises me that BP even tries to hide its responsability, because even if we hated their guts, what could people do?
@cfimeiatpap: I was listening to a BBC R4 programme which had a former oil exec, with a North American accent, I think from Shell, being interviewed about a book he had recently written (pardon the scarcity of details, I was driving with half an ear) and he seemed to echo much of your Tilson’s remarks.
Edit: I must also add the guy was criticising BP, a lot. Anyway, I looked up who I had been listening to: A John Hofmeister.
40% of BP stock is owned by Americans. Note also that “Royal Dutch Shell” has also dropped the real name? Then there’s Aramco, and a few others that aren’t what they appear over the years.
While our patriotic right-wing press opened hostilities with its former colony across the pond after taking umbrage over criticism of “their” BP, I rolled my eyes and ignored most of the silliness but I cannot resist sharing with you this llittle video I found on youtube:
You’ll hate me for this, but nobody forced those people to buy BP stocks, that’s the law of the market; if you risk to win big, you also risk to loose big.
Dtroutma almost 14 years ago
Found out my wife is a shareholder (it’s HER portfolio) and I never would have owned it because of “ethics”, but has anyone asked if Lloyds, or just who is carrying their insurance? I’d be willing to bet that none of these high risk ventures is uninsured, and that IS what put Lloyds in business.
OmqR-IV.0 almost 14 years ago
The trouble is, pension funds are shareholders and although mine isn’t - I checked - it is affecting the markets in London in general regardless because BP is one of the UK’s (and world’s) biggest companies which meant it brought in a fair whack in tax-revenue and our new government is about to usher in a new raft of austerity measures…so it just doesn’t bode well. So, even if one’s ethics had avoided these guys, one is still screwed. Oh joy.
By the way, we are intrigued by the way BP is being called by its full name, ”British Petroleum,” despite a marketing campaign a couple decades ago to just call itself “BP”. ‘Cos then it’s a nasty foreign company, of course. :-| Imagine if BP had a middle name… ”British James Petroleum, you get your arse down here right now, your Dad is going to give you a right bollocking, I tell ya!”
cfimeiatpap almost 14 years ago
Markets hate uncertainty. And you can make a fortune trading off that uncertainty (take John Paulson and David Tepper making billions buying beaten-down financials as a recent example).
Today, no company’s future is more uncertain than BP. The company’s oil spill is ravaging the U.S. coastline. Wildlife, fishermen, and the tourism industry are suffering as a result. Goldman Sachs estimates the total cost of the cleanup (including reimbursements to damaged businesses) at $33 billion. The stock is down from $60 a share to under $33 in less than two months. Credit default swaps (insurance against default) are up 120 basis points to 380 today – that’s up from 45 basis points in April.
Will BP recover from this catastrophe or will the liabilities prove too much for the English oil giant?
Energy investment banker Matt Simmons thinks the cost of the cleanup will sink BP. Yesterday, he told CNBC, “I don’t think BP is going to last – at least not for more than a matter of months.” Simmons is well respected by Wall Street. But he has a penchant for sensationalism (he says the best way to plug the spill is nuclear explosives). He also claimed Saudi oil production had peaked two years ago.
Other BP bears say the company will be forced to suspend its dividend, which costs $11 billion a year. The stock was down more than 15% today on fear of a suspension.
On the bull side, you’ve got fund manager Whitney Tilson saying BP is “just too cheap.” Tilson is taking the classic contrarian stance that things can’t get any worse for BP… Everyone is panicking, analysts are downgrading the stock, and the headlines are awful.
Tilson notes the company consistently earns more than $20 billion in annual profits. And the damages will be paid in pre-tax dollars. Adjusting BP’s annual earnings for taxes, the company earns roughly $30 billion a year – enough to cover the estimated cleanup costs. The company also has more than $8 billion in cash. Plus, efforts to maintain the leak are starting to work.
Tilson also believes BP will maintain its dividend (now at a juicy 11%). He says the company is one of the most widely held stocks in Britain, particularly among “widows and orphans.” Suspending the dividend would harm these people (and we know the government isn’t in the business of making the “common” man suffer).
How should you play BP? The truth is, we don’t know. But we do know that if BP survives, it will be trading at much higher levels in the next few years. And the dividend, assuming it’s maintained, is a great bonus.
CorosiveFrog Premium Member almost 14 years ago
You see how the system got all of us by the b@lls? That’s another reason not to buy stock. They goof, or are just plain reckless (they could be even more reckless than this) and you can’t punish them because it’s your money they hold hostage.
Government failed to ccontrol corporations. Now corporations control the government. It even surprises me that BP even tries to hide its responsability, because even if we hated their guts, what could people do?
pirate227 almost 14 years ago
Sorry Brits, it’s not America’s fault that you hitched your wagon to a reckless shooting star.
OmqR-IV.0 almost 14 years ago
@cfimeiatpap: I was listening to a BBC R4 programme which had a former oil exec, with a North American accent, I think from Shell, being interviewed about a book he had recently written (pardon the scarcity of details, I was driving with half an ear) and he seemed to echo much of your Tilson’s remarks.
Edit: I must also add the guy was criticising BP, a lot. Anyway, I looked up who I had been listening to: A John Hofmeister.
RussellNash almost 14 years ago
BP and basically all oil companies are self-insured. There’s no insurer to go after.
OmqR-IV.0 almost 14 years ago
It would appear that US shareholders might suffer much the same or worse. “Just how British is BP?”
davesmithsit almost 14 years ago
So when do you think BP will bottom out ? That will be the time to buy. Does it also qualify as a tax shelter?If so better yet.
Dtroutma almost 14 years ago
40% of BP stock is owned by Americans. Note also that “Royal Dutch Shell” has also dropped the real name? Then there’s Aramco, and a few others that aren’t what they appear over the years.
OmqR-IV.0 almost 14 years ago
While our patriotic right-wing press opened hostilities with its former colony across the pond after taking umbrage over criticism of “their” BP, I rolled my eyes and ignored most of the silliness but I cannot resist sharing with you this llittle video I found on youtube:
…yet another BP spill…
CorosiveFrog Premium Member almost 14 years ago
You’ll hate me for this, but nobody forced those people to buy BP stocks, that’s the law of the market; if you risk to win big, you also risk to loose big.
SuperGriz almost 14 years ago
Oh, my….
Dtroutma almost 14 years ago
Might review the Exxon/Mobil spills in NIgeria as well.
artiste2 almost 14 years ago
I’d like to know which retailers BP owns!!! Then we should boycott them. Any responses?
parkersinthehouse almost 14 years ago
bruce - grammatical
church - very accurate is redundant
fist bump et
Michigander almost 14 years ago
Radish, about the bankruptcy, don’t give them any ideas; but then again, I’m sure that it is in their plan somewhere.