Sunday, March 25, 2007
An interesting opportunity
Ok, from some of the previous comments it has been highlighted that undue verbiosity is not really what this blog is about. Far from being offended, it actually makes it much easier for me as the workload can be vastly reduced.
Right, the previous two posts will always be construed as negative by the bullish fraternity, so in my last post of the weekend I shall highlight a possible buy.
As I am bearish on the market currently the opportunity of income that will continue safely through a bear market is important.
For you to find this opportunity attractive you will need a viewpoint on the following;
*Oil prices and their possible future direction
*Chevron as a company possessing the financial fortitude to weather storms in the next 10yrs
Having crunched the numbers on CVX I feel as reasonably confident as one can trying to predict the future. The company has a strong Balance Sheet, solid Cashflow and the Income statement doesn't seem unduly manipulated. There are Reserve issues, but there are always Reserve issues with oil stocks. Having said that, they do not seem threatening to the company's solvency.
This is not to say it is perfect, but it is solid, and avoiding Chapter 11 is the issue here.
The opportunity resides in TELOZ.
TELOZ is a Trust that has invested in CVX stock and derives all of it's revenues from CVX, thus the importance of the financial stability of CVX.
Think of TELOZ as an Income Bond.
Income Bonds only pay a coupon when the coupon has been earned, and therefore pays a variable yield, higher or lower dependant upon earnings.
TELOZ is the same, except it is a Trust that trades as a common stock, and has a payout ratio of 100%.
Currently selling for $10 and change with a payout ratio that yields 24%
Therefore if you feel that oil will trade in a range of $30-$40 you will accrue a 24% yield as long as you hold the stock.
If oil rises, the dividend and yield will rise[at todays purchase price], with the added bonus of possible capital appreciation in the stock.
Of course the possible downside is that oil falls to $5-$10/barrel and TELOZ trades lower, a double whammy.
Until next weekend, jog on
d998
Right, the previous two posts will always be construed as negative by the bullish fraternity, so in my last post of the weekend I shall highlight a possible buy.
As I am bearish on the market currently the opportunity of income that will continue safely through a bear market is important.
For you to find this opportunity attractive you will need a viewpoint on the following;
*Oil prices and their possible future direction
*Chevron as a company possessing the financial fortitude to weather storms in the next 10yrs
Having crunched the numbers on CVX I feel as reasonably confident as one can trying to predict the future. The company has a strong Balance Sheet, solid Cashflow and the Income statement doesn't seem unduly manipulated. There are Reserve issues, but there are always Reserve issues with oil stocks. Having said that, they do not seem threatening to the company's solvency.
This is not to say it is perfect, but it is solid, and avoiding Chapter 11 is the issue here.
The opportunity resides in TELOZ.
TELOZ is a Trust that has invested in CVX stock and derives all of it's revenues from CVX, thus the importance of the financial stability of CVX.
Think of TELOZ as an Income Bond.
Income Bonds only pay a coupon when the coupon has been earned, and therefore pays a variable yield, higher or lower dependant upon earnings.
TELOZ is the same, except it is a Trust that trades as a common stock, and has a payout ratio of 100%.
Currently selling for $10 and change with a payout ratio that yields 24%
Therefore if you feel that oil will trade in a range of $30-$40 you will accrue a 24% yield as long as you hold the stock.
If oil rises, the dividend and yield will rise[at todays purchase price], with the added bonus of possible capital appreciation in the stock.
Of course the possible downside is that oil falls to $5-$10/barrel and TELOZ trades lower, a double whammy.
Until next weekend, jog on
d998
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interesting. not sure where u got your numbers, but their latest quarterly payout seems to have been $.357 which would yield 14% and not 24%.
I do not know much about those trusts, heck, i do not know anything. But i recall one of the cnbc.com people writing an article couple of years ago. if memory serves me right he said that eventually both the principal and the income would go to zero -- by design -- as these trusts are tied to specific oil wells and once these wells dry up, it is all gone. Of course, that may take a million years, who knows... certainly not me...
the google finance page does list the specific CVX properties that TELOZ is tied it.
I do not know much about those trusts, heck, i do not know anything. But i recall one of the cnbc.com people writing an article couple of years ago. if memory serves me right he said that eventually both the principal and the income would go to zero -- by design -- as these trusts are tied to specific oil wells and once these wells dry up, it is all gone. Of course, that may take a million years, who knows... certainly not me...
the google finance page does list the specific CVX properties that TELOZ is tied it.
I'm very interested in applying for the Weekend Guest Blogger position the Fly is going to have to fill again, but I don't know how to explain to future employers why I only had the job for two days!
# posted by 
: 9:33 AM
: 9:33 AM
sami
As detailed the yield will vary with earnings from CVX, thus quarter to quarter things will change.
The figures came from the latest 10K
Trusts are tied to specific revenue streams, and issue like Bonds an Indenture, this needs to be read.
The devil is in the details.
Previous comments highlighted the fact that excessive attention to detail was just too much and boring.........thus now much of the detective work I can absolve myself from.
I will highlight areas of potential interest and leave it to the individual to research the suitability for their own portfolio.
jog on
d998
As detailed the yield will vary with earnings from CVX, thus quarter to quarter things will change.
The figures came from the latest 10K
Trusts are tied to specific revenue streams, and issue like Bonds an Indenture, this needs to be read.
The devil is in the details.
Previous comments highlighted the fact that excessive attention to detail was just too much and boring.........thus now much of the detective work I can absolve myself from.
I will highlight areas of potential interest and leave it to the individual to research the suitability for their own portfolio.
jog on
d998
ducati,
i think the comments were a reflection on the readers more than on your work... they want to be as cool as Broker, so they hurl insulting profanities. note that they do not use the same language on their own blogs or in comments to other blogs... note also that they cannot be as cool as Broker just by imitating his language. the dude is unique.
back to the issue at hand, i did some more reading and it seems TELOZ revenue is tied to assets in Louisiana and that they did not do well during the last big storm season. Considering the forecast for another big storm season this summer. I would think this maybe a better buy around fall time.
i think the comments were a reflection on the readers more than on your work... they want to be as cool as Broker, so they hurl insulting profanities. note that they do not use the same language on their own blogs or in comments to other blogs... note also that they cannot be as cool as Broker just by imitating his language. the dude is unique.
back to the issue at hand, i did some more reading and it seems TELOZ revenue is tied to assets in Louisiana and that they did not do well during the last big storm season. Considering the forecast for another big storm season this summer. I would think this maybe a better buy around fall time.
The reflection is on ducati's your work. He didn't do the barest minimum of due diligence, makes claims like TELOZ is profitable until "$5-$10/barrel oil", and then argues that he doesn't have to really do homework because it's just a blog.
Some problems:
1) This "income bond" you talk about paid a grand total of, wait for it, $0 in 2006. Between 1Q96 and 3Q00, it paid the massive sum of $0. In 2004, they only made 2 distributions, 2003: 2, 2002: 3, 2001: 2, 200: 1.
2) In the 10K, the independent engineer they hired says they can expect a total of only $48M more to the trust, and 71% of the will come in the first 3 years following 10/31/05.
3) One of their platforms was taken out during Katrina, is still not back online, and may not be anytime soon. As all but one of the platforms was acquired between 72 and 74, perhaps this is a sign Chevron is not in a big hurry to fix 35 year old rigs.
It's not the bad recommendation I mind, it's the claims that could have been utterly destroyed with 5 minutes of research. $5-10/barrel oil? 24% yield? No mention of hurricanes as maybe being a small problem for them?
Hey fly: I'll write for your blog. I'll just cut and paste Cramer stuff, but pare it down to just the hype. BUY BUY BUY!!!!
Some problems:
1) This "income bond" you talk about paid a grand total of, wait for it, $0 in 2006. Between 1Q96 and 3Q00, it paid the massive sum of $0. In 2004, they only made 2 distributions, 2003: 2, 2002: 3, 2001: 2, 200: 1.
2) In the 10K, the independent engineer they hired says they can expect a total of only $48M more to the trust, and 71% of the will come in the first 3 years following 10/31/05.
3) One of their platforms was taken out during Katrina, is still not back online, and may not be anytime soon. As all but one of the platforms was acquired between 72 and 74, perhaps this is a sign Chevron is not in a big hurry to fix 35 year old rigs.
It's not the bad recommendation I mind, it's the claims that could have been utterly destroyed with 5 minutes of research. $5-10/barrel oil? 24% yield? No mention of hurricanes as maybe being a small problem for them?
Hey fly: I'll write for your blog. I'll just cut and paste Cramer stuff, but pare it down to just the hype. BUY BUY BUY!!!!
Sami, this is not the place to be getting high and mighty. The schtick on this blog is pretty thick and as a result I don't think you can expect the comments section to read like a church social. I come here for laughs, please take your condescending tone and return to whatever stone you crawled out from under.
# posted by : 1:55 PM
: 1:55 PM
Sami, I don't want to be like Broker A- he once asked to see naked pictures of me.
As for the rest of your comments- When in Rome...There are social norms one is expected to follow in whatever community, be it blogosphere or not, and the social norms in this one involve profanity, insults, and regular ball busting.
I come here because I can hurl insults and profanities. This blog is unique in its community which blends humor, sarcasm, profanity, and stock tips and advice. There are other places to read when I want serious stuff. When I want to learn and laugh, this is the place.
As for the rest of your comments- When in Rome...There are social norms one is expected to follow in whatever community, be it blogosphere or not, and the social norms in this one involve profanity, insults, and regular ball busting.
I come here because I can hurl insults and profanities. This blog is unique in its community which blends humor, sarcasm, profanity, and stock tips and advice. There are other places to read when I want serious stuff. When I want to learn and laugh, this is the place.
This blog cracks me up and is very entertaining. It makes me laugh and breaks up the monotony of looking at the computer screen and I do learn something on occasion. Go Gators!!!
Some interesting comments from *fullyarticulate* that are indeed very relevant.
As previously stated the level of research provided would be vastly reduced thus forcing those interested to dig deeper for potential pitfalls.
And there are always potential pitfalls, such is the nature of the beast,
Interesting also that by omitting detailed research, the *market* has delved into the finer details to provide the level of detail omitted, but required.
As to distributions I have as of my data [Reuters] an aggregate distribution of $1.00/unit from 2002-2006 or 10% on current purchase price.
Are Reserves an issue?
Of course.
Could the engineer be right?
Of course.
Could he be wrong?
Possibly.
Are extraction technologies improving?
Yes they are.
The point being you are assuming risk.
You as an individual need to assess that risk, and take responsibility for that risk.
This blog entry was simply to highlight a *possible* opportunity, it was not a recommendation to purchase.
jog on
d998
As previously stated the level of research provided would be vastly reduced thus forcing those interested to dig deeper for potential pitfalls.
And there are always potential pitfalls, such is the nature of the beast,
Interesting also that by omitting detailed research, the *market* has delved into the finer details to provide the level of detail omitted, but required.
As to distributions I have as of my data [Reuters] an aggregate distribution of $1.00/unit from 2002-2006 or 10% on current purchase price.
Are Reserves an issue?
Of course.
Could the engineer be right?
Of course.
Could he be wrong?
Possibly.
Are extraction technologies improving?
Yes they are.
The point being you are assuming risk.
You as an individual need to assess that risk, and take responsibility for that risk.
This blog entry was simply to highlight a *possible* opportunity, it was not a recommendation to purchase.
jog on
d998
if you want to own an oil trust go the fuck over and buy AAV. The dicktarded Candian finance minister is going to get fist fucked and recant his tax on these CANROYS, plus we see a double bottom here at 10, and it currently pays 15%.
mdawsz, not trying to be condescending.
i enjoy the blog and laugh (and learn) a lot from it. my point to ducati was that this is the nature of language/responses around here, not necessarily because of the content of his presentation, but because this is how people talk on this blog... and i still think Broker does it much better than everybody else :)
i enjoy the blog and laugh (and learn) a lot from it. my point to ducati was that this is the nature of language/responses around here, not necessarily because of the content of his presentation, but because this is how people talk on this blog... and i still think Broker does it much better than everybody else :)
Mmmm.... Bonds..... As greasy as gravy. Anyway enough turdflannery I got stocks to discuss and bets to be wagered. Broker what are your thoughts on MPEL? Those Asian's love them some craps and roulette. To actually address Ducati's post (TELOZ), I kinda like it however both of your other posts slurped up the sweat from my balls. I would like to see some charts and shit and possibly some relation to pR0n other than woodshedder saying Fly wanted naked pics of him.
# posted by : 9:15 PM
: 9:15 PM
I agree that AAV is a better buy at $10 based on the history of the monthly distributions yielding 12-14%.. fuck MPEL, it makes a new low everyday..go florida, fuck UCLA..
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