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.
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
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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.