re: Oil stocks...are you buying?

It was a momentary bump, coming back to reality

I don't get the love for cop. Granted I've bought and sold XOM twice in the past 15 months.
The stock I've bought and sold the most is CPE. I've got about 1.5k shares at under $7 and about $1k shares over $8.

The other is PBR. I bought a lot at $4 or under. Non oil related I've been buying Vale at $2.25, $3, and $3.75. It's another Brazil stock flirting with breaking out of a bottom.

I've posted my movement on this thread.

quote:

---

So banks now know that these junk bonds are eventually going to go bad.

---

In general banks don’t “own” junk bonds. Junk bonds are traded in the bond markets like equities. They are lower on the totem pole than revolver’s which are typically backed by reserves (“RBL”). The RBL is considered secured debt and is where most banks have their exposure.

quote:

---

Look, inventories have risen for 6 straight weeks and a supply cut isn't happening. So they want to get as far away as possible from these companies while getting as much as they can back from these loans as possible. They are essentially propping up the energy sector long enough for the affected companies to sell equity and repay secured debt.

---

This isn’t true. Debt has maturity, which is when it is due. Debtholders can NOT (outside of bankruptcy/default) force early repayment.
Also as stated earlier, banks in general do not own “junk bonds”. Their exposure is at the RBL level (secured debt).
If a company is in REALLY bad shape (EXXI, LINE, etc), it is actually in the banks best interest to force an EARLY bankruptcy to: (1) minimize the interest payments that would continue to junk bond holders prior to bankruptcy and (2) maximize the recovery on their secured loan.

quote:

---

For example, let's look at Weatherford International. In Q4 2015 Weatherford had cash of $467 million and debt of $7.5 billion. Of that debt, $967 million of it was revolving credit facility that JP Morgan was the syndicate of. What's insane is that 2 weeks ago JP Morgan was the lead underwriter for an equity offering. With current market conditions and the debt strain on Weatherford, this scenario really doesn't make sense.

---

The reason for the issuance was because Weatherford needed for funds and there were WILLING institutional buyers who would buy the equity. As stated above, JPM can NOT force Weatherford to pay them off with the funds received from the issuance.

quote:

---

The only plausible reason for JP Morgan to risk its reputation like this is for them to have Weatherford use the funds to repay debt the company already owes them. This arrangement allows JP Morgan to get its money out prior to the ship sinking.

---

This isn’t 1940. JPM didn’t risk their reputation for a dam thing. The facilitated an issuance to LARGE INSTITUTIONAL buyers.
Getting your money out prior to the ship sinking is called fraudulent conveyance. It’s illegal and doesn’t work.

quote:

---

For those of you who thought the pain was over and oil is back are going to be horribly disappointed. I've never seen market conditions like this and I believe this just the start to a massive slide in oil in the following months to come.

---

I agree the pain isn’t over. There will be larger bankruptcies that shake up the industry. A massive slide in oil may be a little dramatic.

we'll probably see a small uptick in next week's report.

I'm liking the slide back down. I'm hoping many of these stocks continue to slide. I would love to get back in COP ~$35. Would like to see APC slide back down to ~$40.

Explain?

SGY is just a tumbling.

They're done. When they drew down on their last available credit line, they knew it would send that stock tumbling.

I just got out of everything except for FCX and HLX.

Right around 1000 shares (at an average buy in of 2.00). I'm regretting not selling at 3.50 big time, and should have known it was only a temp bump. But I was in it for the long haul in the beginning and didn't realize how quickly it would spiral. I'm hearing they may get bought out and at this point just holding out hope for that.

Hopefully the OPEC talks that are supposed to happen will do that

quote:

---

Who would buy out a company that will soon go bankrupt when they can just buy said company's assets for cheap at the auction block?

---

I can't imagine it's a target for a buyout. Assets don't support the debt.

quote:

---

Pull out what money you have left in SGY, man. Better to be down 50% than 100%. I'm saying this in your best interest.

---

This is my advice as well. Although it does seem to have found support around $1 to finally stop the tumble.