• 4 minutes US-backed coup in Venezuela not so smooth
  • 7 minutes Why Trump will win the wall fight
  • 11 minutes Oil imports by countries
  • 13 minutes Maduro Asks OPEC For Help Against U.S. Sanctions
  • 12 hours Climate Change: A Summer of Storms and Smog Is Coming
  • 11 hours Tension On The Edge: Pakistan Urges U.N. To Intervene Over Kashmir Tension With India
  • 12 hours The Quick Read On MBS's Tour of Pakistan, India And China
  • 12 hours Iran Starts Gulf War Games, To Test Submarine-Launched Missiles
  • 11 hours BMW to add 2,000 more jobs at Dingolfing plant
  • 10 hours Teens For Climate: Swedish Student Leader Wins EU Pledge To Spend Billions On Climate
  • 14 hours Saudi A to Splash $100 Bln on India
  • 1 day Itt looks like natural gas may be at its lowest price ever.
  • 13 hours Venezuela: Nicolas Maduro closes border with Brazil
  • 7 hours Washington Eyes Crackdown On OPEC
  • 1 day Amazon’s Exit Could Scare Off Tech Companies From New York
  • 22 hours NEW FERUKA REFINERY
  • 9 hours Indian Oil Signs First Annual Deal For U.S. OilIndian Oil Signs First Annual Deal For U.S. Oil
Mad Hedge Fund Trader

Mad Hedge Fund Trader

John Thomas, The Mad Hedge Fund Trader is one of today's most successful Hedge Fund Managers and a 40 year veteran of the financial markets.…

More Info

Trending Discussions

The Value Player's Take on BP

OK, I promise I won't talk about BP again until the stock breaks one way or another. But no sooner do I put out the call to buy the pariah stock at $29, than I hear Whitney Tilson of T2 Partners, one of the giants of the value corner in the hedge fund universe, is doing the same. Whitney has come up with a few more arguments that I haven't thought of, which I will happily pass on.

For a start, no company has ever made more mistakes than BP, and panic is rife. Great time to buy.

BP has the fourth largest revenue of any company in the world after, guess what, three other energy companies, Gazprom (GZPFY.PK), Exxon Mobile (XOM), and Royal Dutch Shell (RDS/A).

Pre crisis Q1 operating profit estimates were at a staggering $34 billion, and the net at $22 billion. While the environmental damage is substantial, it is nowhere near as bad as when 11 million barrels of crude poured into the Persian Gulf during Desert Storm in 1991, which is one sixth the size of the Gulf of Mexico.

The spectacular estimates for the federal fine are based on top end flow estimates at the well head. The real number will come in closer to the actual amount landed on the beach, which could be 0.1% of the headline figure, or so BP lawyers will argue.

While the cleanup cost may come to $2 billion and is payable up front, there may be 20 years of litigation before a payout is ordered for punitive damages.

The Exxon Valdez incident in the end only cost $3.5 billion. The best historical analogy is not asbestos or tobacco, but the 2004 Vioxx disaster at Merck.

The stock halved and then more than doubled, once the initial liability was shaved by 90%. It all harks back to my belief that there is way too much fear priced into this stock than the fundamentals justify.

BP Share Price

Courtesy of: Mad Hedge Fund Trader




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment
  • Anonymous on June 26 2010 said:
    Trying to catch a falling knife? Good luck.The liability could be much larger than anticpated, and as well, the risks. BP is not right now a company to make a bet on. They have very poor corporate culture that needs change. It will take a long time. Better to wait than to guess.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News