Skip to comments.Seadrill And Transocean: Complete Fleet Analysis Comparison And Commentary
Posted on 06/09/2014 11:01:43 AM PDT by shove_it
Transocean Limited and Seadrill Limited are two top-tier offshore drillers that together control a total of nearly 15% of the rigs contracted worldwide. A comparative detailed analysis of their fleet is showing their major differences and their obvious strengths and weaknesses.
The day rate bifurcation between the new generation and the older rig types is showing clearly which strategy will offer them a strong future growth. Introduction.
Seadrill Limited (SDRL) and Transocean Limited (RIG) are two top-tier offshore drilling companies that are very popular among investors. There are a few others, and we should mention also Noble (NE), Ensco (ESV), Diamond (DO), Atwood (ATW), which own a sizable fleet, spread between the floaters and the jackups.
This study will be focusing primarily on the nature and size of the fleet they own now. It is a comparison that I will try to conduct most objectively. Of course, this exercise is difficult because it necessitates special technical skills and knowledge to be able to compare the rig's specifications correctly.
I have been writing many articles about this Industry and covered most of the well-known offshore drilling companies, large and small, that can be traded in the US markets.
This article does not pretend to cover the entire aspects of the valuation process; however, it is a well-documented article that will give an honest look at the company's fleet to a potential new investor. Often, "finance guys" overlook this side which is not really understood, and they rely on financial metrics only, easier to manipulate. It can be very misleading without a wide understanding of each technical part of the offshore drilling Industry.
(Excerpt) Read more at seekingalpha.com ...
It is more important to understand how to create a balanced portfolio than to be correct in any particular stock pick.
When designing a portfolio, I would typically place 75% of the money in blue-chip dividend-paying stocks, 7-9% in REITS, 7-9% in preferreds, and 7-9% in very risky stocks.
In my set of very risky stocks right now, I have Seadrill, Annaly Capital, and Frontier Communications. The divs are good, but the risk is definitely there.
For my income portfolio I have the same distribution as yours but with no very risky stocks. My very risky portfolio is, ahem, not doing as well as the other one - fortunately it is the smaller of the two.
I have a very diversified portfolio, keeping some 20 to 30 different investments active at all times. All but one of them pay dividends. My investment plan is quite simple. I buy mostly dividend paying stocks, and immediately sell covered call options on those that offer them. My total cash return ranges from 12 to 18% on an annualized basis. I have a high turnover rate in my positions, as I do not hold onto them once I reach a certain goal, unless they are continuing to pay out monthly as some dividend stocks do; I don’t try to squeeze that last ounce of profit out of an individual stock; I’ve learned I can get a much better return by taking my profits on that one and re-investing them in a different one. When I reach an overall profitability on a single issue of around 18 to 20% or more on an annualized basis and my option expiration date is a month or so away and I’m in the money on the option, but my ex-dividend date is coming up, meaning that the option will likely get exercised, I’ll go ahead and buy the option back and close out the position for a profit. There’s no reason to hold out in hopes the stock will drop and be able to keep my position when the likelihood is that I’ll get called out of it anyway. It’s better to free up the cash and move on to another profit opportunity.
And trading this way in dividend paying stocks means that my portfolio isn’t as volatile as the market as a whole. And, since my portfolio is all in a tax free IRA, all that cash flowing into my account is exhilarating!
The game is won by not being greedy and not panicking! Base hits provide a consistent income, and I’m pulling in twice the real cash investing this way than I am by working in my job! In the past year, I’ve pulled enough out to take a week long trip to Cancun, a two-week cruise to Hawaii, buy a new SUV, and next week I’m heading for a two-week combined land/sea cruise to Alaska - all pre-paid and in cash, and the taxes have also been pre-paid on the IRA withdrawals. And - the value of my portfolio has also increased by $100K during the last 18 months. So my plan really works. But it does require monitoring and the willingness to write-off the losers when necessary. I can honestly say that I have not had a month that’s been negative cash flow since I started on this journey, in spite of pulling out the cash for my purchases - except for the month I bought my SUV - that was too much for the monthly profit to offset - but just barely.
Congratulations, you are doing very well indeed, far better than I. Tell me, how do you get one of those “tax free IRA” brokerage accounts where you can “write off the losers”?
You just accept the loss. You can’t get a tax benefit for it. The profits you make just exceed the losses.
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