Shiv Kapoor

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    • 2008 Commodity Performance
      Do you have the same chart from the prior cycle low made during Oct 02/Mar/03? It would be interesting to see how commodity gains have panned out during this period.
      Dec 27 09:52 am |Rating: 0 0 |Link to Comment |View article
    • Crash Confidence Looks Bullish
      For a sustainable bottom to form institutional despair needs to exceed individuals; that is where the real money is. I believe this chart like several other indicators is pointing in the direction of excellent long term value while indicating short term risk of a re-test & possible break of the lows at 750. I do not really see the sense in trying to time a bottom; if you buy when valuation is great and continue buying through increase of equity allocations as values get better, then your weighted average portfolio tends to get in at an average closer to the bottom than the peak.
      Dec 27 09:47 am |Rating: +2 -1 |Link to Comment |View article
    • OPEC and Production Cuts: Why Now's the Time to Buy
      I think RIG, NOV & SLB are now attractively valued. Expect bottom on SLB of $32-$33; RIG of $38-$39 and NOV of $17-$18. Earnings flows for SLB should be fairly negative for the next 2/3 qtrs so it will likely give a buy on declines opportunity. The same holds true for RIG/NOV but these two are somewhat insulated because of excellent backlog.


      On Dec 02 08:34 AM yank wrote:

      > ""Valuations might get better"-
      > You have to be kidding right? RIG, NOV, and others are trading at
      > P/Es of 3 or 4, with a PEG ratio of 0.3 It doesn't get any cheaper
      > than that. Basically, these cos are being valued at $15 oil. As you
      > say that will never happen. Yes sentiment is poor. But much of that
      > is tied to the strong US dollar (USD). I cannot see the current rally
      > in the USD as being sustainable. When it cracks oil prices will adjust
      > upward.
      Dec 24 01:10 am |Rating: 0 0 |Link to Comment |View article
    • White House says it's willing to consider use of TARP funds for automaker aid. (Reuters)
      Niner - just read Union feedback. It would appear that they are steering a very responsible course of action. They are not adamnant on no change on compensation; they simply want all stakeholders around a table to make sure everyone contributes equitably. If the Union works with GM/F/C the commercial viability can come around. Reading the Republican view led me to believe the Union had outright rejected any compromise until 2011. Teaches me to not believe everything I read particularly said by a politician. Still think government can also help by buying only American until they turnaround in addition to the loan!

      On Dec 12 09:43 AM Niner wrote:

      > My question to you is. If the only difference between the US auto
      > workers wages and the foriegn autoworkers wages is the retirement
      > benefits paid to the retired US autoworkers wages, do you propose
      > denying these people their retirements?
      >
      >
      > On Dec 12 09:39 AM Shiv wrote:
      Dec 12 11:24 am |Rating: 0 0 |Link to Comment |View news story
    • White House says it's willing to consider use of TARP funds for automaker aid. (Reuters)
      100% with you on they must be saved. What I am saying is that to be saved, they must first be saved from themselves. Just giving them $14b spending money is of no use if they are back to where it all started once it is spent. By the way, there are plenty who would buy a Toyota or a Honda; but there are still people like me who like the Chevy. They have a product, but they need to re-invent themselves to be commercially viable. With the intensity of competition it will be difficult; it will need sacrifices from everyone and even then it might not succeed. But to try and do it without the sacrifices will make chances of success near zero. If we start out with a commercially unviable company, I would rather hold the $14b to pay out the future liabilities for unemployment benefits/orphan fund etc. TARP might save them only if they take steps to save themselves. I also think the government can help by giving GM/F/C backlog; let the government only buy American - that together with $14b should help.

      An unfunded pension plan is one funded by the EMPLOYERS current income as and when required by beneficiaries. It is very bad business as it pre-supposes growth in perpetuity; but most companies tend to put money towards future pension costs every year. GM's plan is massively underfunded; moreso now with its stock worth peppercorn. Social Security is a similar scheme which is hugely underfunded!

      On Dec 12 10:20 AM Niner wrote:

      >
      > those currently retired Autoworkers are receiveing transfer payments
      > just like Social Security. That is an unfunded pension liability.
      > X amount of current wages are going to pay current retirees. I
      > may be wrong on this but I don't think so. If current wages disappear
      > through company closurer, retiree benefits disappear with them.
      > Current retirees are then dumped into the Govt Orphan fund. Albeit
      > it is at a reduced benefit. I have read the formula it would be
      > considerably less but I can't quote it.
      >
      > Face it you and everyone else is still going to pay if they go out
      > of business (US Auto makers). I think in the long run it woudl be
      > cheaper to help them with a new start than to let them collapse and
      > have to pay to clean up the mess.
      >
      >
      > On Dec 12 10:06 AM Shiv wrote:
      Dec 12 11:13 am |Rating: 0 0 |Link to Comment |View news story
    • White House says it's willing to consider use of TARP funds for automaker aid. (Reuters)
      To answer you, retirement is something everyone works towards. If GM/C/F take home is equivalent to the foreign manufacturers and those workers can save for their retirement through the various IRA, 401K, Roth's etc.; so too can GM, C & F workers. They should not be paid a premium compared to industry norms simply because they belong to a Union.

      And it is not just the Union. Management overpaid in the context of the industry norms should be slashed; top management even underpaid in the context of industry norms should be slashed as executive compensation in US has gone crazy over the years. And as Maya says, those dis-service financial service providers; they should be the first to ake significant cuts. For heavens sake a junior just starting out who knows little in terms of the real world gets compensated as an experienced and productive worker - just does not make sense.

      I think the worth of an individual to an entity must be re-assessed in the context of what they contribute. There are lots of folks overpaid and even more underpaid. I liked the old WFMI policy where the top earner divided by the bottom earner could not exceed a certain multiple. I like Warren Buffets compensation. I do not like Thain's. Responsible management needs to replace management greed.

      On Dec 12 09:43 AM Niner wrote:

      > My question to you is. If the only difference between the US auto
      > workers wages and the foriegn autoworkers wages is the retirement
      > benefits paid to the retired US autoworkers wages, do you propose
      > denying these people their retirements?
      >
      >
      > On Dec 12 09:39 AM Shiv wrote:
      Dec 12 10:06 am |Rating: +1 0 |Link to Comment |View news story
    • White House says it's willing to consider use of TARP funds for automaker aid. (Reuters)
      Think about it $14 billion is not going to rescue GM or C unless the Unions accept lower wages immediately. If they do not, $14 billion might see both companies through two quarters max after which they will be insolvent once more. I do not think TARP provides a solution either, the Unions have to come back to the table and hopefully they will if it is clear that their agreement is worth diddly squat if they do not rationalze their compensation structures to parity with Japanese manufacturers in US. A proper Union agreement will greatly improve survival and perhaps even prosperity as the economy recovers. The alternative is a large increase in unemployment; should rise to 9.8% anyway but with this perhaps it could get a bit worse. Statistically, for employment to fall above 9.8% is a remote probability cause it is the level of mean less 3 standard deviation; but statistic modelling does not always work; all it can do is signal a near zero probability. An event can make 100% of that remote liklihood become reality, no matter how improbable. Not sure what the Unions are thinking here; do they want to work for another few months or a lifetime? I do believe a bail out is a good idea, provided that the entities have a chance of survival - without the Unions on board there is little chance of that.
      Dec 12 09:39 am |Rating: +3 -1 |Link to Comment |View news story
    • Wall Street Breakfast: Must-Know News
      Sure it is disappointing. But think about it $14 billion is not going to rescue GM or C unless the Unions accept lower wages immediately. If they do not, $14 billion might see both companies through two quarters max after which they will be insolvent once more. I do not think TARP provides a solution either, the Unions have to come back to the table and hopefully they will if it is clear that their agreement is worth diddly squat if they do not rationalze their compensation structures to parity with Japanese manufacturers in US. A proper Union agreement will greatly improve survival and perhaps even prosperity as the economy recovers. The alternative is a large increase in unemployment; should rise to 9.8% anyway but with this perhaps it could get a bit worse. Statistically, for employment to fall above 9.8% is a remote probability cause it is the level of mean less 3 standard deviation; but statistic modelling does not always work; all it can do is signal a near zero probability. An event can make 100% of that remote liklihood become reality, no matter how improbable. Not sure what the Unions are thinking here; do they want to work for another few months or a lifetime?
      Dec 12 09:18 am |Rating: +11 -1 |Link to Comment |View article
    • Welcome to a New Bull Market
      Sure, and the world could end tomorrow. But nothing would matter then. Political instability, civil unrest & war are opportunities - look at US history.


      On Dec 09 11:19 AM robert.b.ferguson wrote:

      > Economic upheaval isn't all it's crcked up to be. Political instability,
      > civil unrest and war could be show stoppers in emerging markets like
      > India and China. I like Brazil at this juncture and recently took
      > positions in (NETC) and (VIV) as they look to be poised for growth
      > going forward.
      Dec 09 11:58 am |Rating: +2 0 |Link to Comment |View article
    • Expect OPEC to Cut Production
      I sort of agree with you; but in my view everyone except for the user & producer is a speculator. Essentially, a financial investor projects future demand; he speculates on what might be required tomorrow. But you are very right in pointing out that without financial investors it would get difficult to hedge positions.

      Excess liquidity from financial investors is what drove oil prices up. Demand & Supply play a key role but when future demand expectation is unrealistic, the price rise (& subsequent fall) is damaging. I think the whole derivative space needs regulation so that risks undertaken by financial investors is responsible in the context of their capital. I think a financial investor transacting with a producer or with a user is fine; but for a financial investor to have a counter party who has no interest in the physical commodity is dangerous.


      On Dec 08 10:25 AM Fred Banks wrote:

      > Really good article and very good comments. Of course, the contention
      > about the futures market was wrong. That market is NOT distorted
      > by financial speculators who - quite simply - are gambling on the
      > futures market rather than places on the Strip that someone mentioned.
      > Without those speculators there might not be enough liquidity to
      > allow producers and consumers to hedge the oil price. And as for
      > the statement about the futures market being reserved for transactors
      > in physical oil, no no no.......
      Dec 09 11:28 am |Rating: +1 -1 |Link to Comment |View article
    • Oil: Major Short Squeeze Around the Corner?
      It is likely that oil will trade back up following the OPEC 12/17 expected cut. Much depends on how they present it. If they present the cut as being in response to an over-supplied market because of falling demand, then oil has further to fall. Such an approach does two things (1) enhances concerns on present demand and (2) alleviates concerns on future supply (because there is a cut to production not capacity).

      If on the other hand OPEC is clear and says it like it is; i.e. they state (1) an intention to cut production capacity (i.e. no new production enhancing investment), (2) demand and supply are well balanced before the cuts, save perhaps the need for a minor inventory drawdown being required and (3) the cuts in production are intended to uplift prices towards an equilibrium price level; then oil should rally strongly. Hopefully, speculative excess will not drive it to sensless levels once again.
      Dec 08 07:45 am |Rating: +1 0 |Link to Comment |View article
    • Expect OPEC to Cut Production
      Conventional wisdom says that when a fiat currency devalues, commodities tend to outperform. A fiat currency is backed not by hard assets but by the full faith of a nation. When the full faith becomes suspect, people flee the currency for hard assets capable of generation of future cash flows and so commodities tend to outperform. But in my view, playing commodities as a financial hedge against a $ is a past story; play it on fundamentals, for those are strong.

      One reason for falling full faith is rising deficits. As it happens, US deficits are now reaching record levels; excluding 1944-1951 (WW2 impact), when the US deficit peaked at nearly 120% of real GDP, we will be at all time highs.

      Now remember, the market is forward looking. Oil prices traded at irrational levels as the $ weakened in response to a rising deficit expectation. I feel the deficit will rise further throughout 2009. But now it has reached levels from where the expectations will lean towards falling deficits over time - particularly in an Obama government. So $ should remain firm and strengthen - this does not mean commodities will fall in value; all it means is the reason for rising commodities will not include a falling $!


      On Dec 07 10:55 PM samerca wrote:

      > not as informed as most on these boards so a quick question--I've
      > been curious, what would a dollar collapse/depreciation do to the
      > $ price of oil? Thanks.
      Dec 08 01:31 am |Rating: +1 0 |Link to Comment |View article
    • Why Smart Money Should Buy Dell
      The main difference on FCF between your calc and mine will come from the working capital adjustment in each historic years and use of the actual share count each year. No doubt Dell has a hard job ahead of it; I think they have an executable turn around plan which is progressing well, though the economy turn makes it difficult. In terms of Asia competition; this is a real threat - my view is that any company no matter of what incorporation can in the global world do what the Asian competitors do, where they do it. Since Dell has embraced globalization, it stands to benefit greatly. Over an emergent Asian competitor, Dell will have (a) better management (b) better intellectual property (c) better supply chain (d) better access to capital; this coupled with the ability to source and produce in EM's will allow them to stay ahead.

      Mind you since I wrote this post the market has created a fair few opportunities with better FCF growth potentials in basic materials and energy. Provided of course that EM's continue to grow long term.

      On Dec 05 08:36 PM mannheim wrote:

      > What definition of "FCF" are you using with those numbers? If I use
      > FCF = Net Inc + Depr&Amort - CapEx - Cost of Stock Options, I
      > get $1.81 (1/30/08), $1.70, $2.04, $1.71, $1.47 (1/30/04), which
      > puts the 5-yr avg at $1.75...am I missing something here? (all share
      > counts are 1,960 million) This might be mice-nuts, but "inquiring
      > minds want to know"...
      >
      > I'm torn on Dell, because it does have tremendous FCF growth potential.
      > However, the present and future of the PC business is increasingly
      > laptop-driven, which diminishes the value of Dell's marvelous supply
      > chain. At the same time HP has improved their supply chain, further
      > eating into Dell's moat, so much so, that I think these companies
      > for all intents and purposes are at parity. (from the manufacturing
      > perspective) In addition to altering their business model, they
      > need to improve the quality of their consumer products, to Jake's
      > point. They have a lot on their plate...
      >
      > Longer term, I'm also concerned about any competitive advantage they
      > could re-establish. If you look out 10 yrs, there's a good probability
      > of multiple emergent Asian suppliers that could become the lowest
      > cost producers in an increasingly commoditizing business.
      >
      > Given these risks, it seems that any valuation would have to discount
      > appropriately. I don't know if the probabilities can realistically
      > be well-estimated. This might be a case of "too hard"...
      Dec 06 23:32 pm |Rating: +1 0 |Link to Comment |View article
    • OPEC and Production Cuts: Why Now's the Time to Buy
      I would say projects now coming to fruition were based on oil projections at $40-$45. With opex inflation running at 6% and capex inflation running at 12%, average project inflation is 9%; which is some 6% over CPI based inflation of 3%. $40 compounded at a 4% inflation premium for the industry calls for $60 oil.


      On Dec 04 01:41 AM M3 wrote:

      > Good aricle. But the whole basis for your arguement is that USD60/bbl-USD75/bbl
      > is the price needed to cover the marginal cost of production for
      > the additional 7mbd needed now to keep the world running. Why would
      > you think its USD60-75/bbl and not lower like USD30-45/bbl? Oil fields
      > keep pretty tight-lipped about production costs so the actual marginal
      > costs are anyone's guess. However, its a fact that a lot of the increases
      > in production that is coming online now were based on oil prices
      > forecasts of USD30-45/bbl made 10 years ago. Not alot of people had
      > the vision back then that oil would go this far up (especially when
      > oil was trading at around USD15-20/bbl). USD60-75/bbl might be needed
      > for future projects but those that will be coming online in the next
      > 2 years definately have lower costs. Hence, although prices probably
      > won't go too far down, it might be 2-3 years before they rebound
      > to the USD70's/bbl level.
      Dec 04 08:02 am |Rating: +1 0 |Link to Comment |View article
    • OPEC and Production Cuts: Why Now's the Time to Buy
      SLB is a top notch company. Risks are marginally higher because the impact on earnings cannot be assessed until producer capex budgets are adjusted for lower oil prices; i.e. less visibility. Also while the dividend yield on this stock is good and very secure, BP's is as secure and higher. The BP yield gives you the long term market returns and this mitigates risks greatly. Finally, market is not fully pricing in BP's recovery from its Alaska/GoM problems of the past. SLB is excellent value here and I will likely accumalate on dips.


      On Dec 02 02:37 PM mannheim wrote:

      > Why are the Oilfield Services companies like SLB higher risk?
      Dec 02 22:48 pm |Rating: +1 0 |Link to Comment |View article

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