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.
Tiger Legatus Master Fund was up 0.1% net for the second quarter, compared to the MSCI World Index's 7.9% return and the S&P 500's 8.5% gain. For the first half of the year, Tiger Legatus is up 9%, while the MSCI World Index has gained 13.3%, and the S&P has returned 15.3%. Q2 2021 hedge 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.