Made Purchases of BAS, HCLP and VOC

I deployed 2.5% of my account to buy BAS at $12.61.

I put another 2% of my account into HCLP for $47.18.

I put another 3% of my account into VOC for $9.83.

Small margin balance. I am not just commenting when I say I am betting on oil. What we are experience in the oil market is not at all unusual. What is unusual is the sheer lengths that people have taken to sell oil stocks, with almost no evidence, other than a little correction in oil prices, that they are right.

Traders Playing BAS Are Out Of Their Minds

Okay, I’ve read the report from BAS and can comfortably say that those who are pressing BAS shares lower are mentally unhinged.

Today – October 24, 2014 – a prospective investor could purchase shares of BAS for about $13.60. BAS just reported earnings of $0.24 a share, up from $0.06 last quarter. At a current book value of just under $7; and even playing coy and considering BAS earnings of $0.15 a quarter from here forward; BAS is priced with a risk threshold of just 11 years.

At the most recent earnings of $0.24, that threshold drops to a theoretical breakeven point of just under 7 years.

BAS is priced perfectly reasonably, and that gets you exposure to a company that grew revenues an additional 10% in the last three months. Year over year, BAS is growing at a more than 20% clip.

BAS hit these numbers without even factoring in additional operation capacity that is being brought online later this year. Consider for example completion and remedial services, where as of September 30, 2014, Basic had roughly 413,000 HHP up from approximately 351,000 HHP at the end of the previous quarter and 292,000 HHP as of September 30, 2013 – that’s a 42% increase in capacity.

But oil prices are going to render that excess capacity worthless, right? Actually I defer to the CEO on this subject:

“We have not seen a reduction of activity by our customers due to the recent decline in oil prices, and none have indicated reductions in their 2015 growth plans. Early indications of these capital spending programs look to be slightly higher than 2014 levels. We will monitor utilization rates closely and should we see any meaningful pullback, we will react quickly as we have historically.”

So to recap; BAS is a company growing at a rate that makes it the envy of the party, which even excluding any additional growth is moderately priced, down 9% today because people are concerned, mind you, that maybe the industry might slow down (of which there is no indication whatsoever that BAS would be hurt disproportionately or even that that is happening).

Let me put this all into perspective for you. You could go out today and buy shares of BAS for the same price that you could get them last year when the company was losing $0.17 per share per quarter. The market is giving BAS no premium whatsoever for going from an unprofitable company, to a profitable one.

Jesus! – (punches a brick wall in his office) I hate it when the market does dumb shit like this!

I have just mentally budgeted an additional 10% of my asset allocation solely for the purchase of BAS shares until such time as I shall be either satisfied, or badly wounded.

Today, my account stands about 95% long. I am willing to take it to 105% on margin exclusively for the acquisition of BAS shares, not counting on any other purchases I might elect to make or future sales.

First buy order comes at $12.

Made Some Sales Of NADL

I sold off some of my NADL position for $5.96. I had added these shares on 10/15 for $5.43. This locks in a quick 9.8% gain on a small position sizing. It brings my cash position to 5%.

I’m sitting pretty here. So far, I dodged sizable losses by going to 45% cash in August. I also bought what looks like it could be the bottom in the oil and gas space, on margin to 115% of my account. I’ve since sold this bounce down to a 95% long position.

Plenty of my recent purchases are underwater, but I have a healthy profit margin baked into many of them as a whole. I also am closing back in on 10% gains for the year again with lots of room from the highs.

My expectation remains for more volatility and a small pullback ahead. I wouldn’t be surprised if this gets labeled a stock market crash after everything – that fits well with the frequency of market crashes in the US (albeit resting on a small data sample).

As for the oil and gas sector (of which I have a majority of my assets invested at this time) I think we’re near the end of the correction with perhaps room for one last shakeout.

If we crash lower, I will consider adding on margin again. But it will be a slow decision given I am basically fully invested.

Nibbled On More BAS For $13.50

I am now down almost 2% for the year. I took a moment to celebrate this lunacy by nibbling on yet more BAS, for $13.50.

All thanks and praise to the mighty Saudi’s for the wondrous occasion…

No, really though, who do you think Saudi Arabia’s super speculative intentions are going to hurt more? The United States? Or Venezuela, Syria, Russia, Iran, Iraq, Brazil, Nigeria, Algeria, Libya, Egypt, or Yemen?

Cool story: if you’re a country even close to revolutionary upheaval (or just strangled by an ill thought out safety net), the actions of Saudi Arabia are a death knell. And if there’s one thing we’ve seen pretty conclusively, it’s that countries that get tipped into a state of open revolution or political upheaval see their oil production drop…sometimes all the way to ZERO.

So let’s play chicken, you little shits.

The Entirety Of The Saudi Arabia Rumor Is Complete Hogwash

There is a tale floating around that Saudi Arabia is somehow single handedly collapsing the price of oil to destroy Western reserve development. And it is total nonsense.

Reports last month show Saudi Arabia is actually cutting production to maintain pricing.

Meanwhile, Saudi Arabia, the biggest oil producer in the Organization of the Petroleum Exporting Countries finally appears to be responding to the lower demand outlook.

According to the IEA, Saudi Arabia cut its oil output by 330,000 barrels a day last month, apparently in response to lower demand from its customers and a shift in the oil producer’s focus toward Asian markets. The Kingdom’s oil exports are likely to have run below 7 million barrels a day for the last four months, their lowest level since September 2011, as domestic consumption ratcheted up over the summer and supply to the U.S. fell, the IEA said.

I would have called bull on this sooner, but I was a little out of the loop and figured the oil selloff was just a correction anyway.

As for demand concerns, IEA reports have demand for oil growing every year for the foreseeable future. They cut the steepness of this growth and now there’s a jockeying move in markets to price out certain projects. But correcting the plunge in oil is going to be as easy as some field development getting publicly mothballed.

There is absolutely no credibility to this tall tale. Saudi Arabia is not going to be able to single handedly destroy the Bakken’s. They probably wouldn’t want to anyway. The US fields need expensive oil to justify development. Expensive oil plays directly into Saudi Arabia’s hand, since they have very low cost extraction.

If Saudi Arabia insists on meeting the demand that the US fields otherwise would have provided, they’re going to do so at a price per barrel closer to $60. Up until recently, they were getting $100 just by leaving some room on the field. That means Saudi Arabia was getting the same revenue for almost half the production levels, geniuses.

What do you think that does for Saudi Arabia’s oil field life expectancy?

The Saudi’s need the fracking oil because it justifies high prices. High prices buy Saudi Arabia vastly more time. Saudi Arabia would be stupid to try and beat down newer methods of extraction because they would exhaust themselves quicker and ultimately those sources would just come back on line anyway down the line.

Hmmm…step aside for newer extraction methods, get the same revenue for half the effort (weighs the one hand)…try and physically drive these methods out of business, exert double the effort with nothing extra to show for it (weighs the other).

Quit trying to be so cute with these conspiracy theories. Jimmy can go fuck himself.

Year To Date Gains Stand At 20%

In what will unquestionably become the “Hubris Top Tick” post, I will go on the record and admit that yesterday, my account crossed 20% gains this year for the first time.

CCJ sealed the deal for me. After taking a nasty selloff, it exploded over the last week and a half, up 14%, which accounted for half the push from my prior 15%. The other half got picked up here and there.

I’m unsure how long I’ll be hanging out here. HCLP, which is without a doubt the hero of 2014, is reporting earnings first thing in August. The partnership has come a hell of a long way. Will this lead to a pullback? It wouldn’t surprise me, although I’ve decided to hold fast and keep the faith.

The coal trade isn’t working yet; but then again I did decide to forgo a quick entry, opting for steady accumulation. So a slow start is actually better for me.

Made Purchases of BAS, HCLP and VOC

I deployed 2.5% of my account to buy BAS at $12.61.

I put another 2% of my account into HCLP for $47.18.

I put another 3% of my account into VOC for $9.83.

Small margin balance. I am not just commenting when I say I am betting on oil. What we are experience in the oil market is not at all unusual. What is unusual is the sheer lengths that people have taken to sell oil stocks, with almost no evidence, other than a little correction in oil prices, that they are right.

Traders Playing BAS Are Out Of Their Minds

Okay, I’ve read the report from BAS and can comfortably say that those who are pressing BAS shares lower are mentally unhinged.

Today – October 24, 2014 – a prospective investor could purchase shares of BAS for about $13.60. BAS just reported earnings of $0.24 a share, up from $0.06 last quarter. At a current book value of just under $7; and even playing coy and considering BAS earnings of $0.15 a quarter from here forward; BAS is priced with a risk threshold of just 11 years.

At the most recent earnings of $0.24, that threshold drops to a theoretical breakeven point of just under 7 years.

BAS is priced perfectly reasonably, and that gets you exposure to a company that grew revenues an additional 10% in the last three months. Year over year, BAS is growing at a more than 20% clip.

BAS hit these numbers without even factoring in additional operation capacity that is being brought online later this year. Consider for example completion and remedial services, where as of September 30, 2014, Basic had roughly 413,000 HHP up from approximately 351,000 HHP at the end of the previous quarter and 292,000 HHP as of September 30, 2013 – that’s a 42% increase in capacity.

But oil prices are going to render that excess capacity worthless, right? Actually I defer to the CEO on this subject:

“We have not seen a reduction of activity by our customers due to the recent decline in oil prices, and none have indicated reductions in their 2015 growth plans. Early indications of these capital spending programs look to be slightly higher than 2014 levels. We will monitor utilization rates closely and should we see any meaningful pullback, we will react quickly as we have historically.”

So to recap; BAS is a company growing at a rate that makes it the envy of the party, which even excluding any additional growth is moderately priced, down 9% today because people are concerned, mind you, that maybe the industry might slow down (of which there is no indication whatsoever that BAS would be hurt disproportionately or even that that is happening).

Let me put this all into perspective for you. You could go out today and buy shares of BAS for the same price that you could get them last year when the company was losing $0.17 per share per quarter. The market is giving BAS no premium whatsoever for going from an unprofitable company, to a profitable one.

Jesus! – (punches a brick wall in his office) I hate it when the market does dumb shit like this!

I have just mentally budgeted an additional 10% of my asset allocation solely for the purchase of BAS shares until such time as I shall be either satisfied, or badly wounded.

Today, my account stands about 95% long. I am willing to take it to 105% on margin exclusively for the acquisition of BAS shares, not counting on any other purchases I might elect to make or future sales.

First buy order comes at $12.

Made Some Sales Of NADL

I sold off some of my NADL position for $5.96. I had added these shares on 10/15 for $5.43. This locks in a quick 9.8% gain on a small position sizing. It brings my cash position to 5%.

I’m sitting pretty here. So far, I dodged sizable losses by going to 45% cash in August. I also bought what looks like it could be the bottom in the oil and gas space, on margin to 115% of my account. I’ve since sold this bounce down to a 95% long position.

Plenty of my recent purchases are underwater, but I have a healthy profit margin baked into many of them as a whole. I also am closing back in on 10% gains for the year again with lots of room from the highs.

My expectation remains for more volatility and a small pullback ahead. I wouldn’t be surprised if this gets labeled a stock market crash after everything – that fits well with the frequency of market crashes in the US (albeit resting on a small data sample).

As for the oil and gas sector (of which I have a majority of my assets invested at this time) I think we’re near the end of the correction with perhaps room for one last shakeout.

If we crash lower, I will consider adding on margin again. But it will be a slow decision given I am basically fully invested.

Nibbled On More BAS For $13.50

I am now down almost 2% for the year. I took a moment to celebrate this lunacy by nibbling on yet more BAS, for $13.50.

All thanks and praise to the mighty Saudi’s for the wondrous occasion…

No, really though, who do you think Saudi Arabia’s super speculative intentions are going to hurt more? The United States? Or Venezuela, Syria, Russia, Iran, Iraq, Brazil, Nigeria, Algeria, Libya, Egypt, or Yemen?

Cool story: if you’re a country even close to revolutionary upheaval (or just strangled by an ill thought out safety net), the actions of Saudi Arabia are a death knell. And if there’s one thing we’ve seen pretty conclusively, it’s that countries that get tipped into a state of open revolution or political upheaval see their oil production drop…sometimes all the way to ZERO.

So let’s play chicken, you little shits.

The Entirety Of The Saudi Arabia Rumor Is Complete Hogwash

There is a tale floating around that Saudi Arabia is somehow single handedly collapsing the price of oil to destroy Western reserve development. And it is total nonsense.

Reports last month show Saudi Arabia is actually cutting production to maintain pricing.

Meanwhile, Saudi Arabia, the biggest oil producer in the Organization of the Petroleum Exporting Countries finally appears to be responding to the lower demand outlook.

According to the IEA, Saudi Arabia cut its oil output by 330,000 barrels a day last month, apparently in response to lower demand from its customers and a shift in the oil producer’s focus toward Asian markets. The Kingdom’s oil exports are likely to have run below 7 million barrels a day for the last four months, their lowest level since September 2011, as domestic consumption ratcheted up over the summer and supply to the U.S. fell, the IEA said.

I would have called bull on this sooner, but I was a little out of the loop and figured the oil selloff was just a correction anyway.

As for demand concerns, IEA reports have demand for oil growing every year for the foreseeable future. They cut the steepness of this growth and now there’s a jockeying move in markets to price out certain projects. But correcting the plunge in oil is going to be as easy as some field development getting publicly mothballed.

There is absolutely no credibility to this tall tale. Saudi Arabia is not going to be able to single handedly destroy the Bakken’s. They probably wouldn’t want to anyway. The US fields need expensive oil to justify development. Expensive oil plays directly into Saudi Arabia’s hand, since they have very low cost extraction.

If Saudi Arabia insists on meeting the demand that the US fields otherwise would have provided, they’re going to do so at a price per barrel closer to $60. Up until recently, they were getting $100 just by leaving some room on the field. That means Saudi Arabia was getting the same revenue for almost half the production levels, geniuses.

What do you think that does for Saudi Arabia’s oil field life expectancy?

The Saudi’s need the fracking oil because it justifies high prices. High prices buy Saudi Arabia vastly more time. Saudi Arabia would be stupid to try and beat down newer methods of extraction because they would exhaust themselves quicker and ultimately those sources would just come back on line anyway down the line.

Hmmm…step aside for newer extraction methods, get the same revenue for half the effort (weighs the one hand)…try and physically drive these methods out of business, exert double the effort with nothing extra to show for it (weighs the other).

Quit trying to be so cute with these conspiracy theories. Jimmy can go fuck himself.

Year To Date Gains Stand At 20%

In what will unquestionably become the “Hubris Top Tick” post, I will go on the record and admit that yesterday, my account crossed 20% gains this year for the first time.

CCJ sealed the deal for me. After taking a nasty selloff, it exploded over the last week and a half, up 14%, which accounted for half the push from my prior 15%. The other half got picked up here and there.

I’m unsure how long I’ll be hanging out here. HCLP, which is without a doubt the hero of 2014, is reporting earnings first thing in August. The partnership has come a hell of a long way. Will this lead to a pullback? It wouldn’t surprise me, although I’ve decided to hold fast and keep the faith.

The coal trade isn’t working yet; but then again I did decide to forgo a quick entry, opting for steady accumulation. So a slow start is actually better for me.

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