Drilling down for value in energy sector

Executives in the energy sector have had a wild ride over the past three years as oil prices have plummeted then bounced. Difficult at times, surely, yet spare a thought for those running the listed companies that operate deepwater drilling rigs.

The share prices of major offshore rig companies wallow below or near decade lows. Some operators are freighted with onerous debt obligations they cannot easily meet, not to mention equipment that oil companies do not need. SeaDrill and Ocean Rig, both of Norway, have lost 90 per cent of their value this year alone.

No wonder. Daily rental rates for even the most sophisticated deepwater rigs have tumbled 70 per cent, back to prices not seen since 2004. Miserly capital spending by the major oil companies, down more than half to $40bn in the two years to 2016, have not helped.

Adding to this lack of investment from its customers is a bubble of new builds, which is only slowly deflating. Understandably, the market is showing little faith in the underlying value of these rig operators.

US and Norwegian operators trade at just 20 per cent of their stated book values. The market value of US-listed Atwood Oceanics suggests its rigs are worth no more than its constituent steel, according to Fearnley Securities.

That might explain why another US rig company, Ensco, announced it would buy Atwood earlier this month. This week, Transocean followed by striking a deal to acquire Norway’s Songa Offshore for $3.4bn.

This nascent movement towards industry

Article source: https://www.ft.com/content/d218c2de-8258-11e7-a4ce-15b2513cb3ff

Hedge Funds Bought High-Flying Tech Stocks in Second Quarter

U.S. hedge fund managers were active in the FAANG group of high-flying tech stocks in the second quarter, with Third Point increasing its stake in two of the companies and Omega Advisors trimming stakes in three, regulatory filings showed.

The group comprises Facebook, Amazon, Apple, Netflix and Google parent Alphabet Inc., each of which have roughly followed broader U.S. indexes including the benchmark SP 500, Dow Jones industrial average, and the tech-heavy Nasdaq Composite to record highs in recent months.

Daniel Loeb’s Third Point increased its stake in Alphabet by 120,000 class A shares to 575,000 and increased its position in Facebook by 500,000 class A shares to 3.5 million in the quarter ended June 30, according to the filings with the U.S. Securities and Exchange Commission.

Leon Cooperman’s Omega Advisors took a generally bearish stance overall and cut its stake in Facebook by 26,700 class A shares to 236,200. It also cut its stake in Netflix by 12,700 shares to 65,000 shares and trimmed its stake in Amazon by 8,900 shares to 10,500 shares. Omega kept unchanged its stake in Alphabet of 158,835 class A shares.

Cooperman told CNBC last week that Alphabet was his biggest position and that his investment in the company’s shares amounted to about 4-4.5 percent of his fund.

Barry Rosenstein’s Jana Partners, while not a holder of any of the FAANG stocks at the end of the second quarter, showed that it increased its stake in upscale grocer Whole Foods Market Inc. over the three-month period by 9 million

Article source: http://www.newsmax.com/Finance/Headline/Facebook-Apple-Amazon-Google/2017/08/14/id/807576

Buffett’s Berkshire Sheds GE, Adds Synchrony

Warren Buffett’s Berkshire Hathaway Inc. on Monday said it has taken a 17.5 million share stake in Synchrony Financial and shed its investment in the financial services company’s former parent, General Electric Co.

In a regulatory filing detailing its U.S.-listed stock holdings, Berkshire said it owned about $521 million of Synchrony shares as of June 30.

It also reported no holdings of GE, after having reported a roughly $315 million stake as of March 31.

Investors follow Berkshire’s stock holdings closely to determine what has won or lost Buffett’s favor. Smaller equity investments at Berkshire are normally made by Buffett’s deputies Todd Combs and Ted Weschler.

Article source: http://www.newsmax.com/Finance/Headline/13F-Berkshire-Hathaway-Warren-Buffett-GE/2017/08/14/id/807619

Euro prospects on the rise

Before the French elections in April, people were worried about a potential breakup of the euro. But just a few months later, the single currency has been gaining in strength significantly. So why is that? Well, to help answer that question, I’m joined today by Roger Hallam, who’s Currency Chief Investment Officer at JPMorgan Asset Management. Thanks for joining us, Roger.

Good morning.

So first question, what’s been going on with the euro?

I mean, the euro’s rallied strongly so far this year against the dollar. I think there’s been two things driving that. The European economy has continued to make progress with strong growth rates. We’ve seen an improvement in politics in the region.

At the same time, the Trump administration has faced a number of challenges. Has been unable to push through its reforms from either the health care or the tax side of things. And of late, we’ve also seen some very soft inflation prints out of the US, which has driven down expectations of Fed tightening, both this year and next.

Right. So we’ve got a stronger euro against the dollar. Is the euro still a good value for investors, do you think? We’ve got a chart here on this.

I think that depends on your time horizon. Certainly, it’s rallied a lot in the last couple of weeks and we’re seeing a little bit of position congestion over the last few days. But I think when you look at these charts, when you look at

Article source: https://www.ft.com/content/ff8ddb8f-f183-4a17-b662-1ece077071f9