What has been one of the best performing stocks for the past week?
Good old BP (BP), which clawed back an 18% pop off the bottom, a 13% gain from my "buy" call at $29, against an 8% plunge in the stock market, giving you an impressive relative outperformance of 29% (click Here for "Is It Time to Buy BP" ).
Those who heeded my advice and bought the pariah stock can now reach into your inner wimp and book a three week profit. I suspect, though, that if you're a BP player at this level, you are anything but a wimp and are in possession of a pair of brass balls.
It turns out that all of a sudden, the world wants to buy this company while there is blood in the street and oil on the water. My old clients, the Kuwait Investment Authority (Hi Walid!), and at the Abu Dhabi Investment Authority (Hi Ibrahim!), already big owners, have expressed an appetite.
So has that well known value stock player, Libya, where BP is the biggest foreign producer. Other sovereign buyers from China to Singapore to Saudi Arabia have been lining up, as well as a bevy of US hedge funds.
The company announced that it had no need for a secondary equity issue, taking a lot of selling pressure off the stock. It turns out that half the oil that is reaching the surface is evaporating because it is so light.
Surprise, surprise! The formula is simple: C8H12 + H2O + NaCl + O2 +hv = lots of happy oil men, environmentalists, beachgoers, and shareholders. That cuts the potential liability a lot.
This is still not for widows and orphans, who already extensively own it in England much higher up because it was such a "safe" company. Guess what the next big headline for this stock will be?
They cap that sucker, which could happen in a matter of weeks in a best case scenario. That would make the stock soar to $40 or more. If you are worried about the morality of making money from this predatory company, you can always donate your profits to a "Save the Whales" campaign.
Courtesy: Mad Hedge Fund Trader