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TheTalkingMule
Distributed Energy Enthusiast
Some Chevron 2021/22 puts seem to be stabilizing and coming down in price. Jun 2021 $80 strikes are down 15% today to $2.17, may need to jump on a few even before my planned post-coronavirus put-fest.
Perhaps too aggressive? $90 may be a more rational strike price. Do we think the oil majors will touch their 2015 lows by that point in 2021? Logically they should be lower. Chevron bottomed @ $77 in Aug 2015 and that's when they were "certain" to have a future.
Just sayin.....
Perhaps too aggressive? $90 may be a more rational strike price. Do we think the oil majors will touch their 2015 lows by that point in 2021? Logically they should be lower. Chevron bottomed @ $77 in Aug 2015 and that's when they were "certain" to have a future.
Just sayin.....
I stumbled across a summary of Berkshire's 13-F just now. They increased their stake in Occidental Petroleum from ~7 million to ~18 million shares. Also their stake in Suncor Energy by about 50%. Seems pretty nutty to me. Others here probably know a lot more about Buffet and Berkshire than I do - are they interested in these investments for their dividend? Or are they just that blind to what's coming?
adiggs
Well-Known Member
I'd guess the dividend. The pattern I've seen, from years of reading the Annual Letter to Shareholders is to buy established / mature businesses that generate cash (dividends), and use those accumulating dividends to build up cash to buy more businesses that do the same. (Simplified of course)
Doggydogworld
Active Member
Berkshire's real investment is $10b in OXY convertible preferreds. That helped OXY fund their controversial Anadarko acquisition. A few hundred million of common doesn't really move the needle, just trading around their preferreds. They also may have shorted the common in conjunction with their preferreds, so we don't know for sure they're net long the common.
Off topic but for whats its worth
GM to withdraw from Thailand this year GM is withdrawing from Thaland, selling its factories to great wall motors.
In Thailand 2019, the besting car was a Toyota Hilux, then it was a Isuzu D-Max, then it was Ford Ranger, so utes (pickup trucks rank 1,2 & 3). Number 4 was a Mazda2
REPORT: GM to close Holden brand, cease RHD production - Speedcafe
I can understand leaving Australia and Europe, but walking away from India and ASEAN, Thailand Indonesia etc these are the growth markets for vehicles, this reeks not merely of incompetence but of desperation.
GM to withdraw from Thailand this year GM is withdrawing from Thaland, selling its factories to great wall motors.
In Thailand 2019, the besting car was a Toyota Hilux, then it was a Isuzu D-Max, then it was Ford Ranger, so utes (pickup trucks rank 1,2 & 3). Number 4 was a Mazda2
REPORT: GM to close Holden brand, cease RHD production - Speedcafe
I can understand leaving Australia and Europe, but walking away from India and ASEAN, Thailand Indonesia etc these are the growth markets for vehicles, this reeks not merely of incompetence but of desperation.
Saudi Arabia’s Oil Exports Dropped 11% In 2019 | OilPrice.com
Shocker! Saudi Arabia's exports of crude and other petroleum products fell 10.75% from 9.34 mb/d in 2018 to 8.34 mb/d in 2019. It's a full 1 mb/d decline all motivated economically to hold out for higher prices.
It's hard to imagine how the Kingdom can sustain a few more years of 1 mb/d declines. They were trying to pull back exports in areas like the US where stock is fairly transparent. And they were trying to increase exports to China and other parts of Asia, but this has disappointed as well.
It's also hard to square this with all the bullish talk about replacement demand looking for several multiples of a Saudi Arabia to slake global thirst. As long as the Saudis and others are voluntarily withholding production, it seems this production could be resumed if the price were right. I do believe that the Saudis are biding there time for the US frack revolution to run its course, but that would only confirm that the Saudis could return to higher production levels when the market demands it.
It seems there is some pretty deep weakness in Asian demand, more perhaps than the coronavirus cover story would suggest. The pull back in auto sales has got to be a worrisome trend for oil. It also would explain GM's retreat from production in Asia.
Shocker! Saudi Arabia's exports of crude and other petroleum products fell 10.75% from 9.34 mb/d in 2018 to 8.34 mb/d in 2019. It's a full 1 mb/d decline all motivated economically to hold out for higher prices.
It's hard to imagine how the Kingdom can sustain a few more years of 1 mb/d declines. They were trying to pull back exports in areas like the US where stock is fairly transparent. And they were trying to increase exports to China and other parts of Asia, but this has disappointed as well.
It's also hard to square this with all the bullish talk about replacement demand looking for several multiples of a Saudi Arabia to slake global thirst. As long as the Saudis and others are voluntarily withholding production, it seems this production could be resumed if the price were right. I do believe that the Saudis are biding there time for the US frack revolution to run its course, but that would only confirm that the Saudis could return to higher production levels when the market demands it.
It seems there is some pretty deep weakness in Asian demand, more perhaps than the coronavirus cover story would suggest. The pull back in auto sales has got to be a worrisome trend for oil. It also would explain GM's retreat from production in Asia.
I would suggest that Coronavirus is a real big story for the present, but will fizzle out over time.
Immediate term, Coronavirus effect has immediate oil demand destruction and chaos for auto industry
long term, Coronavirus is just another reason to ditch public transport and buy a car.
the other Coronavirus effect, there would've been families who finance 1 ships cargo of oil to sell into asia, basically putting the family home on the line with each ship. The lowest tier of crude buyers in Asia would not be bank finance worthy, basically they are Cash on Delivery customers so profit and risk of selling to the lowest tier goes to the middle man selling to the lowest tier. The Coronavirus possibly wiped many of them out, or at least sent them to cover for an extended period of time.
TheTalkingMule
Distributed Energy Enthusiast
The Solar Sector Is Suffering From Coronavirus Contagion | OilPrice.com
Speaking of coronavirus, Wood Mac thinks it could disrupt solar, wand and battery production and installation in China. They are expecting cell production to contract 10%, or 26GWh this year.
I think this quote is overstating the whole matter. Declining battery costs are a longterm phenomenon. Of course there will be bumps in the road along the way. Consider who solar cell prices went up for a little while when the silicon supply got price. Then silicon producers caught up and the price of solar dropped rapidly making up for lost time.
Speaking of coronavirus, Wood Mac thinks it could disrupt solar, wand and battery production and installation in China. They are expecting cell production to contract 10%, or 26GWh this year.
I think this quote is overstating the whole matter. Declining battery costs are a longterm phenomenon. Of course there will be bumps in the road along the way. Consider who solar cell prices went up for a little while when the silicon supply got price. Then silicon producers caught up and the price of solar dropped rapidly making up for lost time.
TheTalkingMule
Distributed Energy Enthusiast
I'm getting that feeling I had last summer where inevitability was starting to dominate my TSLA thought process. It was pretty clear we were over the hump and something would trigger the long-delayed next leg up. Was gonna buy Jan 2021 options every month or so til it triggered, but thought they were juuuuust a hair too expensive. After all......what are the odd that 3Q will be that trigger?
Hoping we have one more perfect window to buy XOM/CVX/Other 2021/2022 puts before the long drift down begins.
IF coronavirus can be checked off within a month, I think we're OK. Oil stocks could rebound maybe to where they were Jan 1.
IF this drags into April and 1Q earnings start to trickle out.....I think the window closes on easy money long term puts. We could see the inverse of this TSLA run begin for nearly all of Big Oil. It's becoming way too obvious and inevitable.
Lets hope our fearless leaders within the People's Party can get this *sugar* under control!
Hoping we have one more perfect window to buy XOM/CVX/Other 2021/2022 puts before the long drift down begins.
IF coronavirus can be checked off within a month, I think we're OK. Oil stocks could rebound maybe to where they were Jan 1.
IF this drags into April and 1Q earnings start to trickle out.....I think the window closes on easy money long term puts. We could see the inverse of this TSLA run begin for nearly all of Big Oil. It's becoming way too obvious and inevitable.
Lets hope our fearless leaders within the People's Party can get this *sugar* under control!
willow_hiller
Well-Known Member
Interesting anecdote for you all from Maryland: https://www.washingtonpost.com/loca...7f7c44-5341-11ea-929a-64efa7482a77_story.html
"
Takoma Park, the liberal enclave just outside Washington known as the “Berkeley of the East,” is debating whether to outlaw gas stoves, leaf blowers and hot water heaters.
The Maryland city of 17,000 that voted nearly four decades ago to become a “nuclear-free zone” is considering a total ban on fossil fuels, part of a nationwide effort by local governments to address what they see as a lack of federal action on climate change.
The proposal, which was first raised in a new climate resolution, would ban all gas appliances, close fossil fuel pipelines, and move gas stations outside city limits by 2045.
...
Some residents think an outright ban on all fossil fuels, which has never been done in the United States, could be too difficult to implement — or too costly. But others say bold measures are needed to reach the city’s goal of net-zero greenhouse gas emissions by 2035.
"
"
Takoma Park, the liberal enclave just outside Washington known as the “Berkeley of the East,” is debating whether to outlaw gas stoves, leaf blowers and hot water heaters.
The Maryland city of 17,000 that voted nearly four decades ago to become a “nuclear-free zone” is considering a total ban on fossil fuels, part of a nationwide effort by local governments to address what they see as a lack of federal action on climate change.
The proposal, which was first raised in a new climate resolution, would ban all gas appliances, close fossil fuel pipelines, and move gas stations outside city limits by 2045.
...
Some residents think an outright ban on all fossil fuels, which has never been done in the United States, could be too difficult to implement — or too costly. But others say bold measures are needed to reach the city’s goal of net-zero greenhouse gas emissions by 2035.
"
mspohr
Well-Known Member
I'm building a new house now. All electric. No gas. Solar powered. (Heat pump hot water and space heating. Electric induction range.)
Of course my Tesla is electric. All yard maintenance is fossil fuel free.
I have never been interested in shorting because of risk and limited upside but was considering combining a 2X leveraged bet on a broad ESG ETF with shorting an oil and gas ETF. The net effect would be to bet that I can achieve better returns than a straight ESG ETF if the oil and gas sector continues to underperform the broader market, which I think it very likely will.
Has anyone thought about something like this? See any obvious pitfalls other than extra transaction and borrowing costs and the risk of being wrong about oil and gas?
Has anyone thought about something like this? See any obvious pitfalls other than extra transaction and borrowing costs and the risk of being wrong about oil and gas?
TheTalkingMule
Distributed Energy Enthusiast
I'm hearing treasuries are so low the big bucks might flow back into the XOM/CVX dividend machine on macro recovery.
Fingers crossed!
In an effort to diversify my portfolio and build up holdings in dividend-paying stocks, I have started to invest in Hannon Armstrong Sustainable Infrastructure (HASI). HASI is the first of its kind to incorporate itself as a REIT so as to hold renewable energy and sustainable infrastructure assets like wind farms, solar installations, batteries and transmission lines. The generally own these assets and lease them back to clients. As a REIT they need to distribute 95% of earning as dividends so as to avoid paying corporate taxes. So I think this is a very good business form to passthrough ownership of RE installations.
They do not develop these assets; they merely provide lease financing. Some of you will remember when SolarCity tried to operate both as a DevCo (building out new solar assets) and as a PowerCo (financing and harvesting the income stream of those assets). The vulnerability of that combination was that the DevCo was highly dependent on project capital while growth oriented investors seriously undervalued the PowerCo side. My view these days is that it is more robust and transparent for the financing and development partners to be legally distinct and financially independent entities. Also this means that income seeking investors can can properly value the financial holding company. So HASI is a pure play for income investors who want to collect the income stream from RE farms and related assets.
HASI also partners with SunPower (SPWR) as a solar developer. I am a longterm shareholder in SPWR. And this is how I found out about HASI. I love that SPWR can get project financing from and sell assets to HASI. This makes for a clean income statement and balance sheet for SunPower. So I like that these are separate entities and I am happy to invest in both.
I think HASI is poised for really strong sustained growth. While it offers a 3.7% dividend yield, the capital appreciation has been enormous. My hunch is that as deal flow for fossils dry up, income investors will be pushed into other industries to seek income generating assets. A chunk of that capital will flow into RE. So I'm betting that HASI will be able to attract capital both equity and debt for quite a while. There is huge opportunity to build up an enormous portfolio. The PE ratio is high, but I view this as an indication of demand to hold this sort of investment. A strong PE ratio means a low cost of equity, so debt investors will be encouraged to supply plenty of capital at low cost too. This all seems well positioned to be able to build up a huge portfolio, and with that the dividend stream grows too.
I'm pretty excited right now. I'd be interested in feedback from you all.
They do not develop these assets; they merely provide lease financing. Some of you will remember when SolarCity tried to operate both as a DevCo (building out new solar assets) and as a PowerCo (financing and harvesting the income stream of those assets). The vulnerability of that combination was that the DevCo was highly dependent on project capital while growth oriented investors seriously undervalued the PowerCo side. My view these days is that it is more robust and transparent for the financing and development partners to be legally distinct and financially independent entities. Also this means that income seeking investors can can properly value the financial holding company. So HASI is a pure play for income investors who want to collect the income stream from RE farms and related assets.
HASI also partners with SunPower (SPWR) as a solar developer. I am a longterm shareholder in SPWR. And this is how I found out about HASI. I love that SPWR can get project financing from and sell assets to HASI. This makes for a clean income statement and balance sheet for SunPower. So I like that these are separate entities and I am happy to invest in both.
I think HASI is poised for really strong sustained growth. While it offers a 3.7% dividend yield, the capital appreciation has been enormous. My hunch is that as deal flow for fossils dry up, income investors will be pushed into other industries to seek income generating assets. A chunk of that capital will flow into RE. So I'm betting that HASI will be able to attract capital both equity and debt for quite a while. There is huge opportunity to build up an enormous portfolio. The PE ratio is high, but I view this as an indication of demand to hold this sort of investment. A strong PE ratio means a low cost of equity, so debt investors will be encouraged to supply plenty of capital at low cost too. This all seems well positioned to be able to build up a huge portfolio, and with that the dividend stream grows too.
I'm pretty excited right now. I'd be interested in feedback from you all.
Thank you @jhm for your continual contributions to this thread. I've learned a lot from you and continue to do so. I found Tesla in 2012 and bought in then because I believe in that phrase: "Skate to where the puck is going to be, not to where it has been..." So those of us in here see where the future is headed and this seems like a reasonable company to invest in.
How long have you been following it? The price is pretty high now.... Do you think it's still a good time to get in or should we wait?
Thanks. I found it just a few weeks ago. As you can see from a pricing chart, for the last couple of years there have been few pullbacks to use as an entry point. I bought yesterday because the whole dang market was down, but HASI was only slightly down for a little while. So I can't tell when we'll have a good buying op. My own strategy will just be to accumulate every so often. The PE can be fickle thing. But I think this could be really attractive for dividend growth investors, so maybe alot of them are just waiting for little dips too.
I like the "skate where the puck will be" analogy. Tax efficient income is what a lot of energy investors seem to want. But the ice is getting pretty thin for fossil investments. Indeed the chronic overinvestment in fossils is indicative of just how much these investors need this kind of investment to work for them. When the the ice starts to crack that capital will be trying to claw its way back up to the surface. Even if I don't know where the puck will be, it's getting clear where the puck sink out of play.
mspohr
Well-Known Member
Fossil-Fuel Subsidies Must End
We think this is wrong. In a new paper in the journal Nature, we make the case that they do matter—a lot. In the 2018 study, emissions reductions from subsidy removal were calculated by the researchers to be five hundred million to two billion metric tons of carbon dioxide per year by 2030. This figure is by no means “small.” It amounts to roughly one quarter of the energy-related emission reductions pledged by all of the countries participating in the Paris Agreement (four to eight billion tons). Hundreds of millions of metric tons of CO2 reductions is nothing to sneeze at, particularly when it can be achieved by a single policy approach that also brings strong fiscal, environmental and health benefits.
We think this is wrong. In a new paper in the journal Nature, we make the case that they do matter—a lot. In the 2018 study, emissions reductions from subsidy removal were calculated by the researchers to be five hundred million to two billion metric tons of carbon dioxide per year by 2030. This figure is by no means “small.” It amounts to roughly one quarter of the energy-related emission reductions pledged by all of the countries participating in the Paris Agreement (four to eight billion tons). Hundreds of millions of metric tons of CO2 reductions is nothing to sneeze at, particularly when it can be achieved by a single policy approach that also brings strong fiscal, environmental and health benefits.
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