Not every Gulf oil company deserves a post-BP boost (Stone Energy)

September 13, 2010

Now that the BP well has been finally containmed, it is only natural that market participants have come to expect a great deal of the shrinkage in valuation of Gulf oil producers to reverse itself to some degree. Certainly there will be new regulations, and perhaps more onerous inspection standards, but on the whole it […]


Western Refining’s (WNR) junk bonds are worth the risk

August 16, 2010

I have a certain weakness in my heart for junk bonds. Junk bonds, of course, are bonds with a sub-investment grade credit rating, and they can range from just barely on the cusp of investment grade to the point where the purchaser would have to be crazy to consider them. As Ben Graham wrote, an […]


Earnings season part 2 – Linn Energy

August 1, 2010

Linn Energy (LINE), the other company I wanted to discuss, has a more opaque set of figures, and this may be due to the fact that their derivatives strategy is more integral to their business. But on the other hand, Warren Buffett has stated that if a company wants you to understand its financial statements, […]


Fuel Systems Inc.: Natural gas burns too

July 19, 2010

A couple months ago I saw a car driving along the freeway with a windmill in its roof, merrily milling the wind along as the car was zipping towards San Francisco. Of course, the car was some manner of hybrid. Although I commend the car owner for its efforts, I do not commend him for […]


Who needs yields? I do, I do! (Breitburn Energy)

February 9, 2010
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Some of you may recognize our old friend Hoggy the Yield Hog over there, whom I last mentioned in the context of Breitburn Energy. I took the position that colossal plunge in unit price since the partnership announced that it was suspending distributions was entirely unjustified. The partnership was still making money; it was just […]


Not Yet (Rentech Inc.)

December 10, 2009

The trouble with getting in on the ground floor of a new technology is that you never know how tall the building is going to be. Too many investors confuse technological brilliance with competitiveness, and a typical example of that is Rentech Inc. On the whole I’ve never been too excited about technology for its […]


Junk bonds: Not always junk, but pretty often (Callon Petroleum)

November 19, 2009

If you have been following this blog for some time, you may recall the first move I recommended was the bonds of Bon-Ton Department Stores, which I suggested could be hedged by shorting an equivalent dollar value of the stock. At the time the bonds were at 46 and the stock was at $4. Now, […]


Who needs yields, anyway? (Breitburn Energy Partners LP)

September 27, 2009

Some of you may recognize our old friend the yield hog from the Windstream article, but we should ask ourselves what a dividend signifies. For bonds, yields are typically all we get, but for stocks? True, a big dividend yield will amortize our margin balance if we choose to buy on margin, but as Seth […]


An Unsustainable Dividend is no Dividend at all (eventually) (Calumet Specialty Products)

September 20, 2009

As you may recall, I commented on the dangers of being a yield hog, which is a constant temptation for those of us who seek investments that produce high and sustainable cash flows. Sustainable but not high is not good enough, and high but not sustainable is even worse, because when the cash flow runs […]


Writeoff Forgiveness and Goodwill (ConocoPhillips)

September 15, 2009

Benjamin Graham wrote in Security Analysis that a great deal of financial analysis involves recasting financial reports to get a full sense of a firm’s baseline ability to produce earnings. A lot of the process involves removing nonrecurring or irrelevant events from a single year’s results, as we did with LINE’s profits on its derivatives. […]