What Did You Buy Today?

[fenders53]

(04-30-2020, 10:24 AM)crimsonghost747 Wrote:

(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.
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.

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.

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.

First of all I don't blame you for selling.  I do it almost automatically on a cut because the chances I can get back in significantly cheaper is VERY high.  The share buybacks are biting every company that did it while they maintained substantial debt.  There are a number of incentives to buyback shares and some of them encourage company officers to look out for themselves ahead of common shareholders.  I was very close to buying RDS based on the recommendation of you and others.  I knew the dividends were iffy for anything oil.  

One of the biggest problems is you now have a loss of shareholder confidence in the CEO.  It was ill advised to all but promise the dividend just a few months ago.  Here in 'mericuh we call that getting 'kindered".     Richard Kinder did the exact same thing about 5 years ago.  Raised and promised the Div, then cut it literally weeks later.  I was not at all pleased.  It definitely needed done, and KMI lived on, but it takes a LONG time to roll your shareholders over so the vast majority were not a victim.  Management has to be very careful with their promises because they won't be forgotten.  RDS will be most everyone's last super-major choice until others cut, which I expect within 90 days if things don't change in a big hurry.  Doesn't seem like a reasonable expectation but this is a commodity.   

In conclusion.  You keep venting.  Get that rage out!  We're here for you  lol.  It didn't go down like it should have.