Thursday, 10 June 2010

BP - Bankruptcy Possible?


At the close of business at the Stock Exchange today, my BP shares are down almost 40% on the year at 365.5. It seemed to me that the market initially over-reacted to the disaster in the Gulf of Mexico, and presented a buying opportunity. On May 27th the stock rallied about 7% but the slide has since resumed in earnest.

BP is one of the biggest companies in the world, engaged in one of the most profitable businesses and from what I read, the company's assets now exceed their market valuation. The concern about the continuing leak of oil, together with concerns about the open-ended liability is clearly weighing heavily on the stock, which is now at a 13-year low. I've owned them for over 20 years, so I'm still in profit!

Their annual report is usually consigned to the bin unopened, but this next one will be opened and read. I'm leaning towards adding to my shares over the next few weeks. The news surely can't get too much worse for them.

4 comments:

Anonymous said...

"which is now at a 13-year low. I've owned them for over 20 years, so I'm still in profit!"

Your regular readers wouldn't expect anything less, Cassini. You should consider ghost writing for John the gambler :)

Cassini said...

Maybe you missed the exclamation point...?

Thanks for stopping by.

Anonymous said...

Although a terrible disaster and the clear up process will take many years
however, BP is an interesting investment situation.
The oil rig was leased from an American company, no doubt BP has various forms of insurance which I expect is sub underwritten at Lloyds of London. The share price is now below asset value.
Mid term elections in the USA are due in November and up until the oil disaster, the current Presidents popularity had been falling.
If you recall the Valdez disaster
litigation lasted for 19 years.
Unfortunately BP's media department has let it down.
In betting terms, is a purchase
of BP shares a value bet?
Just for the record no investment advice is being sought or offered the value of shares can go up and down.

Rgds

Dave

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