iBankCoin
Stock advice in actual English.
Joined Sep 2, 2009
1,224 Blog Posts

Going Higher

I don’t know if this is just a bounce or a new leg to the rally. But we’re going up, folks.

The EURUSD is back near 1.275, after bleeding below 1.27 earlier. The collapse of the euro has been the driving force of the move in oil and the correction in the markets. That’s it; the big mystery. The oil glut, the game of “guess demand whack-o-mole”, the sudden fear – nothing next to the euro.

The other excuses being provided are just not that relevant. The data is fine. Demand is shifting around and notoriously sluggish but altogether fine also. Jobs creation is slow, but fine. There’s no real data even reflecting the fears of observers on display yet.

But the euro is an undertow and its move from above 1.4 to below 1.27 did damage. It strengthened the dollar considerably and sent trade out of balance.

With the euro firming up a bit, it’s going to help take some of the edge off. For as long as the EURUSD is lifting I am constructive on stocks and commodities.

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“OH NO’S” More Dreaded Oil Slowdown

Courtesy of Platts:

Growth Rate Hit 15-Month High; China Imported Gasoline for 1st Time since Late-2011

SINGAPORE, Oct. 27, 2014 /PRNewswire/ — China’s apparent oil demand* in September climbed to the second-highest level since 2005, with a growth rate that was the sharpest in 15 months, according to a just-released Platts analysis of Chinese government data. Platts began tracking apparent oil demand in 2005.

Apparent oil demand in September was 42.34 million metric tons (mt), or an average 10.35 million barrels per day (b/d) – up 7.4% from the same month a year ago.

Analysts said previous stimulus measures by the local government, including loosening of credit controls; the lifting of the annual summer ban on fishing in China’s waters; and autumn harvest activity in the farming sector buoyed domestic oil demand.

On a month-over-month basis, China’s apparent oil demand in September rose 6.2% from August. During the first nine months of the year, total apparent oil demand was 9.95 million b/d, an increase of 1.8% from the same period last year.

Crude throughput by refineries in September jumped 9.1% year over year to 42.02 million mt, or an average 10.27 million b/d, according to the latest data released by the National Bureau of Statistics (NBS). This was also the second-highest level on record and marks the third time this year that China’s refinery throughput exceeded 10 million b/d.

“The higher refinery run rates in September followed the end of a heavy schedule of refinery maintenance in summer,” said Song Yen Ling, Platts senior writer for China. “Major refineries, including PetroChina’s Lanzhou refinery and Sinopec’s Shijiazhuang refinery, returned to full operations after being closed in part or full for maintenance or upgrades.”

One interesting note – Platts says that China’s oil product imports are falling, down 19%. China is making even more in house than importing. Gasoline demand is also up 18%.

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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.

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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.

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The Window For The iBC Investor Conference Is Closing

A wonderful opportunity awaits you in Las Vegas, Nevada.

There you will receive teaching at the hands of a market sage – Jeff (the Option Addict) Kohler – two special presentations from successful industry practitioners Howard Lindzon and Jeff Macke, be served world class comestibles and carouse in the presence of your fellow men and women of industry.

That evening attend a special VIP event on the MGM Skyline Terrace. Mingle with your associates, expand your network, and perhaps, without realizing it, meet one of iBankCoin’s own writers travelling incognito.

Indeed I am please to announce all who attend the conference will also receive a free sample of iBankCoin’s newest featured product, the Income Investment Report.

The Income Investment Report is a quarterly interactive publication and PPT enhancing experience. Every quarter receive a detailed analysis of twenty five positions tailored for the investor seeking income from his or her portfolio. The Income Investment Report breaks down recent business fundamentals, risk exposures and relative pricing against hundreds of other possible income investments one could make.

The Income Investment Report is a publication of the highest quality – I should know, I wrote it.

If you are ready to commit to the best event you will attend all year, click here.

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Hoist The King’s Flag

You were given a choice in life; to walk the path of righteousness or slither along the trail of the disreputable. Life was yours, to go where you will. The possibilities were endless and wonderful, reaching like skyscrapers in the eyes of a child’s imagination.

You chose to fly black sails and follow in the teachings of one “Tyler”.

Today will bring the reward deserving of a pirate. The Royal Navy is come crashing down upon your most pitiful crew with aim of sinking your vessels to the dark fathoms below. Any survivors will be hung by their necks on the shoreline, as a warning to other misty eyed urchins who might dare to dream of such a wanton lifestyle.

Practitioners of the Dark Arts shall be brought to justice today. Ho hum.

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