The Ratings Industry Is A Stupid Place

Let’s just take a second to really breath in the absurdity that takes place around us on a day by day basis, shall we?

Here is a recent history of analyst recommendations for BAS (one of my favorite positions, I will say right off the bat, since it traded at $12).

Untitled

Look specifically at the ratings being issued by Wunderlich Securities. On October 28, 2013, Wunderlich downgraded BAS from a Hold to a Sell. Then, yesterday, they upgraded BAS from a SELL to a HOLD.

And now let’s look at the price action in BAS.

(CHART NOT WORKING: Link until I can fix it)

Wunderlich almost marked the explosive upside to the inflection point. If we don’t go anywhere, they will have “downgraded” 100% of equity gains.

Okay so Wunderlich blew the call and got it wrong. They then reversed their rating to a Hold from a Sell (if you listened you missed out on a move that is being converted to a logarithmic scale on most finance sites). Fair enough – mistakes happen.

That’s not what irritates me. This is what irritates me:

Will This Upgrade Help Basic Energy Services (BAS) Stock Today?

NEW YORK (TheStreet) — Basic Energy Services Inc. (BAS_) was upgraded to “hold” from “sell” at Wunderlich Securities.

The firm upgraded their rating based on improvements in the weather and natural gas prospects.”

Will this upgrade help BAS? I would fucking hope not

I don’t want to sound indignant here because I guess as a shareholder, any good news is welcome. But…Christ…

We have just devolved to the point of putting anything out there that we can slap a curious headline on to whore a few hits on a website. After a miss like that, why should Wunderlich Securities’ have the ability to move markets with regards to BAS? If I were to make a list of analyst opinions I care about when it comes to BAS, Wunderlich (and basically half the others on that sheet at the top of this post)…they’re not even at the bottom, okay? They’re not even on the list.

The 24/7 “news about nothing” cycle just starts to grind on you after a while. We have a multi-million (billion?) dollar industry that seems to exist for the sole purpose of employing people to tell me stuff. Why I should listen though…as of yet, nobody has really explained that.

Maybe The Street should instead do a story about how many analysts (including their own) completely missed an obvious buying opportunity. And if you relegate yourself to those sites (rather than read the grassroots efforts of iBankCoin or like), you probably had no idea.

Because less I let this slip by, here’s The Street’s own rating for BAS:

TheStreet Ratings team rates BASIC ENERGY SERVICES INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

“We rate BASIC ENERGY SERVICES INC (BAS) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company’s strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and poor profit margins.”

What’s that? Sorry I’m too busy being up 130% on this position to hear you.

Well Well Well Well Well

I come to you from South East Michigan, where we are privy to a miniature, personal snow flurry. I know it’s not snowing elsewhere in this state, because I had to drive deep into the wooded heartland to wrap up tax season (always have shadowy figures an hour’s drive away from any IRS building do your taxes. If the IRS wants to pop in for a visit, make them earn it).

It’s a bizarre experience to have a heavy snowfall with blue skies overhead, for sure.

I was privileged, alongside the rest of you, to watch the market turn on the face of a dime and ram higher this afternoon, much to the shock and horror of the “new depression” crowd.

You dicks should have to surrender your mark before getting invited onto these unsavory televisions shows to preach. Every time we get an unexpected 10% correction, I get to hear how we’re just days away from a 50% plunge into total chaos.

Then when it doesn’t happen, the perpetrators limp back home where they keep a low profile, knowing that their only blessing in this world is that nobody cares enough to remember them, and therefore cannot point out the last half dozen times they blew it.

Janet Yellen has spoken and her message is one of love…for equity. Take your medicine.

The Blood Continues

I’m seeing stocks nosedive across my screen, where once positive positions are flipping to losses rather abruptly.

My opinion, with a 20% cash position and still greater than +10% gains for the year, is likely much different from yours. I am going to wait this out, because I can afford to try, having shunned the tech space basically indiscriminately.

I’ve known enough programmers to know better than to invest money with them…

If I start getting into the +6% range for the year or if I get scared, well then I’ll change up and raise cash. In the back of my mind, I have to believe that Yellen is at least as dovish as Ben. She will exert her influence eventually, and then this sweet elderly woman will go Scarface on short sellers.

BAS Continuing The Epic Run

Check out Basic Energy Services, up another 4.5%, flirting with $27.00 as it steadily pounds its way to $30.00.

HCLP is playfully tagging along, after the doldrums took it down back below $40.00 this week. And well it should – they’re in the same industry after all. What’s good for BAS is great for HCLP.

Uranium is slack and UEC is dying (very small position). CCJ is back to it’s old range, and I am saddened by that.

But this is a buying opportunity make no mistake of that.

Remaining Calm

As I said yesterday, it doesn’t make any sense for me to slam on the alarms and start flipping switches. Reversing machinery has a cost associated with it, and I’m not doing all that just for a little hiccup.

BAS is running higher today. That’s reassuring. My account is mixed, although what is down is dragging me lower.

My +14% year has slid to a +11%…hardly the stuff of night terrors.

Check out HCLP, back below $40.00. This is a screaming buying opportunity. The company is growing revenues at a 100% annual clip, for crying out loud. And to be frank with you, I don’t think that growth rate is all that sensitive to the economy right now. It’s based on the natural gas cycle – I mean, I’m sure there’s a level of wanton destruction where HCLP gets gutted, but it’s a lot more pressure than what I’m seeing cooking right now.

If BAS can trade higher and natural gas optimism is where it’s at, HCLP is a bargain steal at these prices.

Let’s Assess The Damage

The market is ugly right now, but if we’re to be honest with ourselves, we’ve been overdue a selloff for going on 15 straight months now. Actually, we don’t even know that we’re getting a real one yet. I suspect we are, but that’s sort of the great mystery here isn’t it.

I have 25% cash still, a far cry from the 50% I had just back in January (and admittedly visually bad timing), but why should I panic just yet? I’m (was) +14% for the year. And if I had been more defensive, can you really argue I’d have been better off?

Check out BAS, up a whopping 61% so far this year, then tell me I should really have been holding more cash. As it was, I sold off exactly the right assets while holding onto what needed to be held – via pure dumb luck of course.

And because this timing is just luck, if I panic and raise cash back to 50%, as far as I’m concerned I’m more likely to miss out on the next big move in my assets. If there’s anything that BAS or HCLP has taught me, it’s that my research is solid and my hand is hot right now; and those fruits can come to bear at any moment, with or without me.

So I’m inclined to sit back, be patient, and hold the position that the real cautious move on my part is to be afraid of missing out on the upside, not of participating in the draw downs.

In the meantime, I’m going to watch PGJ get battered to ribbons, clutching my put option lottery tickets like an addicted gambler.

The Ratings Industry Is A Stupid Place

Let’s just take a second to really breath in the absurdity that takes place around us on a day by day basis, shall we?

Here is a recent history of analyst recommendations for BAS (one of my favorite positions, I will say right off the bat, since it traded at $12).

Untitled

Look specifically at the ratings being issued by Wunderlich Securities. On October 28, 2013, Wunderlich downgraded BAS from a Hold to a Sell. Then, yesterday, they upgraded BAS from a SELL to a HOLD.

And now let’s look at the price action in BAS.

(CHART NOT WORKING: Link until I can fix it)

Wunderlich almost marked the explosive upside to the inflection point. If we don’t go anywhere, they will have “downgraded” 100% of equity gains.

Okay so Wunderlich blew the call and got it wrong. They then reversed their rating to a Hold from a Sell (if you listened you missed out on a move that is being converted to a logarithmic scale on most finance sites). Fair enough – mistakes happen.

That’s not what irritates me. This is what irritates me:

Will This Upgrade Help Basic Energy Services (BAS) Stock Today?

NEW YORK (TheStreet) — Basic Energy Services Inc. (BAS_) was upgraded to “hold” from “sell” at Wunderlich Securities.

The firm upgraded their rating based on improvements in the weather and natural gas prospects.”

Will this upgrade help BAS? I would fucking hope not

I don’t want to sound indignant here because I guess as a shareholder, any good news is welcome. But…Christ…

We have just devolved to the point of putting anything out there that we can slap a curious headline on to whore a few hits on a website. After a miss like that, why should Wunderlich Securities’ have the ability to move markets with regards to BAS? If I were to make a list of analyst opinions I care about when it comes to BAS, Wunderlich (and basically half the others on that sheet at the top of this post)…they’re not even at the bottom, okay? They’re not even on the list.

The 24/7 “news about nothing” cycle just starts to grind on you after a while. We have a multi-million (billion?) dollar industry that seems to exist for the sole purpose of employing people to tell me stuff. Why I should listen though…as of yet, nobody has really explained that.

Maybe The Street should instead do a story about how many analysts (including their own) completely missed an obvious buying opportunity. And if you relegate yourself to those sites (rather than read the grassroots efforts of iBankCoin or like), you probably had no idea.

Because less I let this slip by, here’s The Street’s own rating for BAS:

TheStreet Ratings team rates BASIC ENERGY SERVICES INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

“We rate BASIC ENERGY SERVICES INC (BAS) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company’s strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and poor profit margins.”

What’s that? Sorry I’m too busy being up 130% on this position to hear you.

Well Well Well Well Well

I come to you from South East Michigan, where we are privy to a miniature, personal snow flurry. I know it’s not snowing elsewhere in this state, because I had to drive deep into the wooded heartland to wrap up tax season (always have shadowy figures an hour’s drive away from any IRS building do your taxes. If the IRS wants to pop in for a visit, make them earn it).

It’s a bizarre experience to have a heavy snowfall with blue skies overhead, for sure.

I was privileged, alongside the rest of you, to watch the market turn on the face of a dime and ram higher this afternoon, much to the shock and horror of the “new depression” crowd.

You dicks should have to surrender your mark before getting invited onto these unsavory televisions shows to preach. Every time we get an unexpected 10% correction, I get to hear how we’re just days away from a 50% plunge into total chaos.

Then when it doesn’t happen, the perpetrators limp back home where they keep a low profile, knowing that their only blessing in this world is that nobody cares enough to remember them, and therefore cannot point out the last half dozen times they blew it.

Janet Yellen has spoken and her message is one of love…for equity. Take your medicine.

The Blood Continues

I’m seeing stocks nosedive across my screen, where once positive positions are flipping to losses rather abruptly.

My opinion, with a 20% cash position and still greater than +10% gains for the year, is likely much different from yours. I am going to wait this out, because I can afford to try, having shunned the tech space basically indiscriminately.

I’ve known enough programmers to know better than to invest money with them…

If I start getting into the +6% range for the year or if I get scared, well then I’ll change up and raise cash. In the back of my mind, I have to believe that Yellen is at least as dovish as Ben. She will exert her influence eventually, and then this sweet elderly woman will go Scarface on short sellers.

BAS Continuing The Epic Run

Check out Basic Energy Services, up another 4.5%, flirting with $27.00 as it steadily pounds its way to $30.00.

HCLP is playfully tagging along, after the doldrums took it down back below $40.00 this week. And well it should – they’re in the same industry after all. What’s good for BAS is great for HCLP.

Uranium is slack and UEC is dying (very small position). CCJ is back to it’s old range, and I am saddened by that.

But this is a buying opportunity make no mistake of that.

Remaining Calm

As I said yesterday, it doesn’t make any sense for me to slam on the alarms and start flipping switches. Reversing machinery has a cost associated with it, and I’m not doing all that just for a little hiccup.

BAS is running higher today. That’s reassuring. My account is mixed, although what is down is dragging me lower.

My +14% year has slid to a +11%…hardly the stuff of night terrors.

Check out HCLP, back below $40.00. This is a screaming buying opportunity. The company is growing revenues at a 100% annual clip, for crying out loud. And to be frank with you, I don’t think that growth rate is all that sensitive to the economy right now. It’s based on the natural gas cycle – I mean, I’m sure there’s a level of wanton destruction where HCLP gets gutted, but it’s a lot more pressure than what I’m seeing cooking right now.

If BAS can trade higher and natural gas optimism is where it’s at, HCLP is a bargain steal at these prices.

Let’s Assess The Damage

The market is ugly right now, but if we’re to be honest with ourselves, we’ve been overdue a selloff for going on 15 straight months now. Actually, we don’t even know that we’re getting a real one yet. I suspect we are, but that’s sort of the great mystery here isn’t it.

I have 25% cash still, a far cry from the 50% I had just back in January (and admittedly visually bad timing), but why should I panic just yet? I’m (was) +14% for the year. And if I had been more defensive, can you really argue I’d have been better off?

Check out BAS, up a whopping 61% so far this year, then tell me I should really have been holding more cash. As it was, I sold off exactly the right assets while holding onto what needed to be held – via pure dumb luck of course.

And because this timing is just luck, if I panic and raise cash back to 50%, as far as I’m concerned I’m more likely to miss out on the next big move in my assets. If there’s anything that BAS or HCLP has taught me, it’s that my research is solid and my hand is hot right now; and those fruits can come to bear at any moment, with or without me.

So I’m inclined to sit back, be patient, and hold the position that the real cautious move on my part is to be afraid of missing out on the upside, not of participating in the draw downs.

In the meantime, I’m going to watch PGJ get battered to ribbons, clutching my put option lottery tickets like an addicted gambler.

Previous Posts by Mr. Cain Thaler