Several people this past weekend asked me if I owned any shares of BP in the Tarpon Folio. My answer was the same in each case:
“No. Shares look cheap, but management is incompetent.”
Sometimes it’s just that simple.
Regardless of how inexpensive shares might get, I have no desire to be a partner in that particular business. BP is less integrated than its peers, seems overexposed to Russia – at least to a layman like me – and, among other things, now carries with it huge uncertainty in terms of future cash calls related to this spill. And that’s about as much thought as I have given it. That I live in a small fishing village near the Gulf could be coloring my judgment here, but if so, that’s a bias I’m okay having.
I suppose there is probably a moat of some sort around BP’s business in terms of scale and/or reserves, but it does not seem particularly wide. And if you’re investing in a small-to-no moat business, management makes all the difference.
That, incidentally, is one of the advantages of owning a wide moat company…the business should do okay even if management does dumb things.
We do still own Contango in Tarpon, and we now own shares in another deepwater E&P company, but that’s a subject for another time.
“Citigroup is investigating a rumor that one of its traders entered a trade that helped precipitate a drop of almost 1,000 points in the Dow Jones Industrial Average, a spokesman for the bank said on Thursday.”
Developing story. More here. But I’m afraid I’m just not buying the “dumb trader” excuse. It’s not like he mistakenly added an extra zero before hitting the return key. More likely, if there was indeed an error, the odds seem high that it would be related to high frequency trading.
Ah, Wall Street. Don’t be so afraid to be competent!
And wasn’t there a movie about this sort of thing?
This week the Mortgage Banker’s Association, a group that represents 2,400 real estate finance companies in Washington, DC, was forced into a rather embarrassing situation on its own mortgage.
The MBA sold its headquarters building on a short sale for $41.3 million…a little more than half the $79 million it originally financed in 2007.
I’m not sure how they could even attempt to spin that. Sums up this mortgage crisis pretty well, though, don’t ya think?
$TNDM This is the comp the mkt worries about? Peerless can't seem to raise VC $, more discounts & use credit lines...? http://bit.ly/bQo0Fd 2 days ago
