Ben Graham (1976-FAJ)- "The stock market resembles a huge laundry in which institutions take in large blocks of each other's washing...without true rhyme or reason."
The spasmic market decimated Hydril's stock price following the decline in oil and nat. gas prices. I do not believe that I have any crystal ball or special edge in forecasting future oil prices. However, as seen by all of the johnny-come-lately hurricane forecasters predicting another "storm of the century" in the year AFTER Katrina hit, it appears that many "expert forecasters" offer much ado about nothing. After seeing Berkshire's reinsurance profits rise 5-fold, I have a bold prediction myself(with a 99% certainty) that Buffett will have a very funny, smart-ass quip in his upcoming 2006 annual report about the various weather experts and forecast models!
Onto the subject at hand, am up significantly on HYDL. Originally wrote up at $55/share, but the stock fell so fast at the beginning of October I wound up buying a half position at $50.50. Following an awesome wedding for my brother in Austin last week, I was incommunicado for the last 10 points of stock movement (luckily, as it did not tempt my fate to sell my shares). HYDL earnings will likely be limited in the near-term, as excess drill-pipe capacity needs to be worked off by E&P companies. At $50/share, HYDL traded at 7x Ebitda with a huge order backlog and a strong management team ( I worked with them as a private lender at Principal, top shelf guys...even when the market was not overly favorable towards them). Am not buying any more here and debating whether to sell some (just so I can say I made 30% within a month :) ). The RSI on this was near 20 and way oversold in early October and is now nearly 70 (overbought).
In other news, notable LBO/buyouts that have occurred today include SWFT (Swift Transport- Walmart trucking co.) and ELK (Elkcorp exploring strategic actions and company bid....stock is up 23%), ELK was a name I had ordered up annual reports on due to its valuation and the fact that all of my neighbors get their roofs replaced every 5-7 years unnecessarily (insurance money). Interestingly, SWFT first peaked my interest more than a year ago based on the insider buying by their CEO at $22/share. Their CEO is back for the rest of the company with a $29/share bid that may increase. No position in either of these companies unfortunately.
No comments:
Post a Comment