04-30-2020, 10:24 AM
(04-30-2020, 09:25 AM)Otter Wrote:(04-30-2020, 08:58 AM)fenders53 Wrote:(04-30-2020, 02:47 AM)crimsonghost747 Wrote: Sold all of my RDS.They would not have been my prediction for the first true oil major to cut. Probably an ominous sign for what next earnings reports bring. Reality is they all need to trim the Div starting about a quarter ago. I'm not wishing that on anyone of course, but borrowing the Div for long would be a mistake. It appears a couple of the majors are going to do just that.
That div cut, this big and this early, together with the suspension of the share buybacks just makes me think that the management doesn't see any way out of this.
For the moment I will take my losses (yay some losses so no taxes!) and rethink the situation with them. I do like the company as a whole so I may very well buy back into it at some point.
It was my intent to wait for a few majors to cut before I re-enter oil. No other sector has beaten me up so bad. I am going to get a huge margin of safety or I'll skip it.
Equinor cut first, and Ive always considered them a major. Norway's sovereign wealth fund depends heavily on them (used to be Statoil).
They and Shell are making the smart move for the long term. Conserving cash right now will be key to future growth and profitability in this sector.
I think Shell is, again, doing it the wrong way. My biggest pet peeve about them was their scrip dividend a few years ago (issuing shares instead of handing out money) which, while saving cash, dilutes ownership. You do that when the share price has tanked, then start buying back those shares when the share price gets high and now once again cancel the share repurchases the second the price dips. That is just absolutely atrocious management of cash.
Why do I bring this up? Because just a few months ago Shell was still happily making billions of dollars excess cash flow per quarter. They did pay down some debt but they also went quite heavily into share repurchases, I think that was at around 25 euros per share. Now, a few months later at 15 euros per share, they are in a situation where they have to stop the repurchases AND dividend just to save cash. The very same cash that just a couple of months ago was "extra" and could be used to purchase and cancel shares. Shares that were issued since they didn't have enough cash in the last down turn.
It might be a smart move to cut the dividend but if that is the case then it should have been done back in 2015.