Member Info for Boyobach

Hi Nightpusher: I think the most apparent chart impact of the dividend will be the 7p drop on ex-div day next month, which will hopefully recover over a short period or even be outweighed by more positive factors.
G’s dividend policy is known and priced-in by the market. As the sp varies then so will the yield, effectively reflecting the market’s view of the overall investment value and risk. Whether G’s profits are distributed as a dividend, used to pay down debt or to grow the business, they represent value for investors. There’s a theory (Modigliani & Miller) that dividends are unimportant: if cash is retained by the company rather than distributed, the market cap should go up and investors can sell shares to provide their own dividend if they wish.
In essence, I think G’s free cashflow is rather more important than its dividend and that, ultimately, a company’s dividend is only as good as the last one it declared.

23rd April:
G bottom of the Friday pack again unfortunately. Another poor week for Oil Co’s despite Brent remaining near the middle of the $60-$70 range. OPEC+ seem to be achieving relative stability whatever the pundits say. Because G is pure production - no refining, retail etc. the sp should come down to simple OP, production levels, value of reserves…. and cash flow. Revenues may not reach 2019 levels but they’ll be a darn sight better than 2020 for sure. So 160 at the close is disappointing but at least it seems to be finding support. https://invst.ly/ukhma

There’s a lot going on in this next chart but it illustrates a few things:
1)G is broadly moving in sympathy with other oil cos (in this case RDS is the example but it could easily have been Chevron)
2)Brent has recently remained fairly calm in the $60-$65 range and is not a significant factor in the recent falls of either RDS or G.
3)The G price scale is at roughly 2.7x Brent (green trace) - so you can easily see when G has exceeded 2.7xBrent (not often and not currently)
4)Like RDS, G is not at an historically strong support level although it has recovered to 165 from this price in the past. So it’s something of a coin-toss as regards falling further, with 145-152 being an obvious target area.
https://invst.ly/ukcui

I agree with your sentiments bunks.
Given the current circumstances, I’m looking more closely at support levels. I must say that I wouldn’t have picked 159 as especially promising. But let’s hope...
https://invst.ly/ukbhl

Worth a read:
Challenges Forecasting The Next Few Months
https://uk.investing.com/analysis/oil-market-forces-and-indicators-have-changed-what-traders-need-to-know-now-200470236
Extract:
Fourteen months ago, oil traders looked generally at certain indicators to forecast prices. They looked at production trends, OPEC+ policy, the general health of economies (to determine future demand), and seasonal issues related to travel, refining, electricity usage (where oil is burned for electricity), etc.

Today, the information traders need has been turned on its head. Production trends in the U.S. are hard to deduce, in part because producers are wary of changes brought on by new government leadership.

OPEC+ has become reactionary, changing policy on a monthly basis instead of every six months. Economic health is no longer organic, but now tied directly to the imposition and relaxation of restrictions and lockdowns imposed by governments.

That is why we see so many diverging forecasts and forecasts changing monthly. Nothing is what it was at the start of 2020.

I'm in no rush to add any stock just at the moment, Tartine, especially oil related.

I bought on a rising share last May and watched it crash again in October ......
You watched it rise for a few months and did nothing when it crashed ..... AGAIN ?
Stevebt: the share you bought presumably rose for 4 or 5 months, it must then have dropped out of the rising trend? So profits were possibly available for the taking at that point?
It obviously wasn't RDS or any oil share.... they've done well since October.
Basically, if you buy on a rising trend and see it fall out of the trend then you have the chance to exit with minimal loss and, very possibly, at profit.

Since March 15th G has been falling at the same rate as others, for example RDS shown v G here (15' view):
https://invst.ly/ujg7h
How far the downtrend will go is anyone's guess at the moment, so my plan is to keep cash handy until it at least breaks out of it.

People sometimes focus on buying 'at the bottom' without considering the fact that the bottom is only established after the event. This leads to the strong likelihood of buying prematurely. The smart move is to buy once the bottom appears to have been established - holding a share that is rising in value is better than holding one that is falling.
'Can RDS go lower than the current price?' is, perhaps, a better question than 'Will RDS go lower?'
The current trend (always watch the highs for a falling trend) is pretty clear (15 minute view): https://invst.ly/ujf1a

Yeah - an awful day for RDS and the wider market as far as I can see.
In addition to the price drop, RDS has fallen out of the medium term upward trend I mentioned earlier: https://invst.ly/uj5gj So will 1250 be the bottom or will May 2021 (which includes an ex-div period) be a re-run of May 2020?
Remember how that went: https://invst.ly/uj5o5 ? As I recall 1160 was the real support until things went seriously TU in late summer. A handy time to have cash available and to watch the trading (intra day) charts methinks.

There is no scientific concensus.....
There isn't a concensus (about climate change), Tantalum, but there is a scientific consensus and RDS has known the score for a good while. Comparing the diverse views of the global scientific community to reported election or polling figures in a totalitarian state isn't exactly a good basis for objective argument.

Yes Barrie - trading is obviously not foolproof and I'm not suggesting it is. When an sp hits an upper trend line or resistance then it's either going to be a turning point or the sp is going to cut through, potentially to the next level. Nobody gets that judgement right all the time, which is why I don't generally do 'all-in' or 'all-out' - unless I've decided to exit a given share. It's a similar balance of judgement when the sp is falling. When the decision point coincides with a strong trend AND a resistance/support line then the outcome should be rather more apparent, of course. Like you, I could sell some at £15 but, being comfortably in profit at that point, I might well wait to see if it pushes further - especially given the medium term upward trend: https://invst.ly/uiyg7

....RDS lags.
My formula for estimating the sp based purely on OP is now around 130p above the actual, indicating that RDS has dropped back by that amount since mid Feb due to factors other than OP.

The green line on this chart follows the formula quite closely and illustrates when RDS diverges from it: https://invst.ly/uix-p It’s obvious from this that, whilst RDS and Op were closely linked to each other from early Feb until early April, RDS has levelled out in the last fortnight whilst Brent has been marching on. At least one thing is certain - whatever factors are holding RDS down, Brent isn’t currently amongst them.

In my view, bald_eagle, the 'all-in or all-out' approach reduces investing to pure gambling. With a quality share moving fairly smoothly then I'd be aiming to trade in 10% tranches but always watching the trends closely. If you get a trade wrong then you can often reverse quickly if the sp looks like breaking in the wrong direction or, more usually, trade another tranche at the next level or cycle. Had I been deep in RDS when it began to fall sharply last year, then I'd have been progressively selling the highs on the way down, because the trend was pretty convincing ,and buying-back once a reversal seemed to be in progress (I accept that , in general, you are unlikely to time it perfectly). That's basically why I move from 'overweight' (having a surplus and looking to sell) through to 'underweight' (having less than my normal level and looking for a buy opportunity). I'm currently slightly overweight RDS - so expect it to rise rather than fall. But I'll re-evaluate if it falls further depending on whether it looks like revisiting £9 or £10.

I think focussing on £20 for RDS will lead to continued disappointment, whereas accepting it as a nominally £14.25 +/- £1 share, with a yield in the region of 3% reflects the current reality. Progress beyond that level should, in my view, be seen as an achievable but longer term prospect. I am overweight RDS at the moment, having re-acquired shares sold at £15+ and I'll prudently trade the peaks and troughs just as I did years ago when I held RDS at around £25. The saying ‘never sell Shell’ glosses over a simple investment reality - even the best performing shares need to be managed.

....who dumped 100k shares at 170p?
Someone shifting over to GKP out of frustration maybe? They'd missed the boat for this week of course... Still, 7.5% up on the week for the noisy neighbours' one trick pony. That's what having years of future production - even with discounted heavy sour in the KRI - can do for you. Now if Bina Bawi was rolling.....

So G ended the week at the bottom of the usual group and virtually ‘flat’ over the week:
https://invst.ly/uhyx1
Whilst the likes of Chevron and RDS didn’t fair much better, it’s very disappointing for G given that Brent rose by nearly 6% through the week, with half of the rise due to US inventory numbers from the EIA on Wednesday. G’s revenue is so tightly linked to OP that you’d expect better. Indeed there are only three things that really drive the sp these days: OP, level of production and consistency of payments. There is no escaping the conclusion that G is progressively slipping as the sp to OP ratio has only reached 3x on two days so far this year, had lost its grip around 2.8x and is now languishing at 2.5x . It’s worse now than during last summer.
Here’s a chart of G v 3xBrent since October 2019, G is ‘doing good’ when it’s above the green Brent line - which we haven’t seen much of since August last year: https://invst.ly/uhz23

The fact that a trend has developed is no guarantee that it will continue, so it is of very limited use as a predictive tool - it just indicates the sort of path you might reasonably expect if things continue as they are. To that extent, trends are much more useful as detectors of change because when the price heads in a new direction it necessarily breaks out of an existing trend. Yesterday’s jump in OP, due to an inventory drop reported by the EIA, fortuitously nudged RDS into a tram-line trend that it was almost falling out of before it was even established. So whether it will last is very speculative, although RDS is still very weak relative to OP, so there’s plenty of headroom:
https://invst.ly/uhbik
It’ll be nice if it becomes established because it suggests a 30 to 40p per month rise in the sp range could be on the cards..

Pokerchips: Excellent point as always! I confess that Gas is an enigma for me - there’s no obvious correlation between NG and RDS. Today seems a good example of RDS reacting to OP(green), whilst just yesterday a similar percentage increase in NG (Blue) had virtually no effect: This is a 15 minute view: https://invst.ly/uh00b
NG pricing didn’t drop around April last year, so I don’t think it explains the divergence with Chevron. Here’s a view since the beginning of 2020: https://invst.ly/uh04m
Am I missing something?

Hi Nightpusher & Barrie.
Well it's intriguing that the divergence with Chevron began almost precisely on that date whilst the divi cut was not announced for another two weeks. I also believe that Chevron did not confirm retention of their dividend until some time later. If the divi cut was indeed the reason - and I agree it's a factor - then there's good reason to suppose that the gap between Chevron and RDS should eventually close back up. This is because the cash that would otherwise have been distributed by RDS has been used within the business: so either way it represents value to shareholders. On the subject of buybacks I'm not convinced of their benefit either, especially if they are bought at relatively high price. However, as an example here’s a chart of Genel’s sp during a $10m (declared maximum) buyback process in 2019 split into two parts during the periods shown. The shares were put into treasury. The company’s intention was expressed as follows:
‘Genel believes that the current share price significantly undervalues the Company's assets, and that utilising its balance sheet to repurchase shares represents a value accretive use of its cash resources.’
https://invst.ly/ug-f5
We all know what happened when 2020 came along but, after the buybacks finished, G was to climb to an H2 high. Did the buybacks enhance the sp? I wouldn’t say so. I’m happy to look at RDS if you point me at the dates of interest.