Helmerich & Payne (HP) Valuation Analysis

Not to buy is an active decision.  I took a serious look at Helmerich & Payne and, though we really liked the company, my conclusion was not to buy the stock at this price (see analysis).  However, this research was not a complete waste of time, because at a lower price, in the $20-30s, HP looks like a very interesting opportunity.

Helmerich & Payne (HP) Valuation Analysis

Oil drilling is a game changer. In 2008 half of gas drilling was vertical drilling. From 2010-2012 over 80% of gas  drilling was horizontal or directional drilling. As natural gas prices declined to $2-3 mcf drilling for gas became  uneconomical, and gas rig count declined from 900 to 450 from 2011 to 2012 – by half! But since oil prices remained  high overall, total rig count has not changed much; it just shifted from gas to oil.

Relying On Old-Fashioned Stock Picking, Lee Ainslie Reports His “Strongest Quarter” Ever

Lee Ainslie's Maverick Fund USA enjoyed its "strongest quarter in the fund's history" during the three months to the end of June. According to a copy of the firm's second-quarter letter to investors, which ValueWalk has been able to review, Maverick Fund USA gained 18% in the second quarter. Following this performance, the fund was Read More


Full document is embedded below in scribd:

Vitaliy N. Katsenelson, CFA, is Chief Investment Officer at Investment Management Associates in Denver, Colo.  He is the author of The Little Book of Sideways Markets (Wiley, December 2010).  To receive Vitaliy’s future articles by email, click here or read his articles here.

HP Analysis

Previous articleApple Inc. (AAPL) iPhone 5 Sales Estimate Boosted by Gene Munster
Next articleHedge Funds: Everything you Ever Wanted to Know [INFOGRAPH]
I was born and raised in Murmansk, Russia (the home for Russia’s northern navy fleet, think Tom Clancy’s Red October). I immigrated to the US from Russia in 1991 with all my family – my three brothers, my father, and my stepmother. (Here is a link to a more detailed story of how my family emigrated from Russia.) My professional career is easily described in one sentence: I invest, I educate, I write, and I could not dream of doing anything else. Here is a slightly more detailed curriculum vitae: I am Chief Investment Officer at Investment Management Associates, Inc (IMA), a value investment firm based in Denver, Colorado. After I received my graduate and undergraduate degrees in finance (cum laude, but who cares) from the University of Colorado at Denver, and finished my CFA designation (three years of my life that are a vague recollection at this point), I wanted to keep learning. I figured the best way to learn is to teach. At first I taught an undergraduate class at the University of Colorado at Denver and later a graduate investment class at the same university that I designed based on my day job. Currently I am on sabbatical from teaching for a while. I found that the university classroom was not big enough for me, so I started writing and, let’s be honest, I needed to let my genetically embedded Russian sarcasm out. I’ve written articles for the Financial Times, Barron’s, BusinessWeek, Christian Science Monitor, New York Post, Institutional Investor … and the list goes on. I was profiled in Barron’s, and have been interviewed by Value Investor Insight, [email protected], BusinessWeek, BNN, CNBC, and countless radio shows. Finally, my biggest achievement – well actually second biggest; I count quitting smoking in 1992 as the biggest – I’ve authored the Little Book of Sideways Markets (Wiley, 2010) and Active Value Investing (Wiley, 2007).