10
Nov

Wrap – Week Ended 11/09/07

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Glad to see that ugly week off the books. 

wrap-110907.jpg

Change In Holdings For The Week Watch: 

  • (EXM) Nov $65 calls for $4 on Monday. The stock has been shattered by the resurgence of the sub-prime story which dragged the broad market lower and the Chinese demand story. The Chinese are making threats about importing less iron ore and using more of their stock piles. This sent a ripple through shiping rates that was extremely short lived. However, once the tide turned against the dry bulk stocks profit taking ensued without regard for valuation.

  • (DRYS) December $125 for $9.70 on Tuesday. The stock was at about $115 before I picked it up, the market dropped and it closed Friday at $97. The only difference between what happened here and what happened with the EXM trade above is that DRYS had a very nice earnings report on the day after I picked it up. Estimates since that report have come up since the report and stock now trades at 6x 2008 earnings of $16.24.

Sidebar: quick look at drybulk valuations and rates.

drybulk-110907.jpg

  • (CHK) Added the $40 December Calls for $1.45 on Monday and double down on Wednesday at $1.85. Their subsequent earnings report was tremendous in terms of production and reserve growth, cost control, play development and just about every other metric I could hope for. I continue to hold Dec and Jan strikes here.
  • (COP) Added to $85 November calls for $1.61 and sold the (COP) $80s for a 59% gain. My average in the $85s is just over $2 so without an improvement in the market we will be taking a loss here next week.
  • (BTU) Sold the remaining half of my November $50 calls for a 185% gain.
  • RIG Sold half the of the Nov $120s for a 131% gain.  RIG / GSF shareholders approved their merger on Friday. They expect to close the deal by year end and I plan to exit the stock and not roll forward this week. 2009 EPS estimates for the combined company are ranging from $17 to $20 which makes it exceedingly cheap, especially given its capabilities and market.
  • VLO Added December $72.50 calls for $2.10 on Friday.
  • APC Entered Nov $60 APC calls for $0.45 on Friday. 

Crack Spreads: Continuing Improvement. If not YoY, at least sequential improvement. This table will show another week of improvement when I update it for Tuesday's post as you can see from the Generic 3-2-1 crack in the table at top.

 crack-spreads-110207tso.jpg

 

 

9 Responses to “Wrap – Week Ended 11/09/07”

  1. 1
    TTupp Says:

    z- you around?

  2. 2
    zman Says:

    howdy, what’s up Tupp?

  3. 3
    TTupp Says:

    so btu dropped so much that day like last week because its essentially worth less by the amount of the company that was spun off, and rallied since it was a money loser anyways?

  4. 4
    TTupp Says:

    rig/gsf action will be inherently different correct since its a merger not a spin off?

  5. 5
    zman Says:

    Re BTU: it dropped by what was a essentially amounted to a stock dividend. It rallied more than I would have thought but there were anecdotal stories about foreign coal demand and then you had rio tinto mines being bought by bhp which sent the dirt commodities higher.

    rig/gsf is different but still expect the stock to take a hit since it’s a stock and cash dividend deal. It may rally enough on the close date to cover this up but the math is anything > 109 RIG would see the stock fall since there is a cash component formula. It get’s a little messy and I want to be in after the deal closes. I may buy some leaps and just not worry about the dip but near term options could get sacked. Not saying they will but they could. Leaps would let me ride it out.

  6. 6
    aitrader Says:

    Sinotrans may raise $1.5 billion in offering

    HONG KONG: Sinotrans Shipping may raise as much as 11.45 billion Hong Kong dollars, or $1.5 billion, from a Hong Kong initial public offering that has drawn Citadel Investment, a U.S. hedge fund, according to three people with knowledge of the sale.

    It plans to increase the capacity of its dry-bulk fleet by nearly fourfold, more than double those of its oil tankers and container ships over the next five years, Daiwa said.

    Sinotrans is already one of the largest shipping companies in China with the 26 dry-bulk vessels it owned by the end of June. It also has three oil tankers and five container ships.

    It has ordered 13 more ships, which are expected to be delivered by 2010, including eight dry-bulk vessels, four container ships and one crude oil carrier, said Daiwa’s report.

    Its IPO, if priced at the top end, would be the largest Chinese shipping IPO since at least 1999 and the second-largest public stock sale by a Chinese shipping company in the same period, after China Cosco’s $2 billion Shanghai offering in June, according to data compiled by Bloomberg.

  7. 7
    freeflow Says:

    good morning

  8. 8
    Zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » Monday Morning and all is Red Says:

    […] Comments freeflow on Wrap – Week Ended 11/09/07mimster90 on Position Update Friday – What A Great / Lousy Weekaitrader on Wrap – Week Ended […]

  9. 9
    zman Says:

    morning freeflow…just posted the monday post.

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