Member Info for Boyobach

A good article, GfG. I liked this observation in it:

‘[OPEC] are effectively increasing their spare capacity by reducing actual production. And they will not change course until prices rise, which they would only do if a supply disruption occurs.’

OP has always been a guessing game.

The current reduced output from North Dakota (part of the Bakken field which crosses North Dakota, eastern Montana, and southern Saskatchewan) is temporary due to weather conditions and it’ll be back in full swing as the next months of futures contracts come into focus.

But one thing is for sure: OPEC and US Shale tussle for volume and price, which either drives it to a sweet spot that suits both or it goes off the rails.

This shows Shel v Brent over the last few months.

https://invst.ly/1331ep

I'm currently thinking that Shel 's sp will absorb a further modest fall in OP and hold above the blue unless something unexpected happens (which, of course, it probably will !! ).

I don’t entirely agree with your dismissal of fundamental factors, Gioviano, they are not all random and unrelated to the price. Ocdo operates in a tough sector and it has to navigate a lot of challenges even when things are going well.

What stands out for me is the fact that the charts - which reflect the herd instinct and crowd behaviour of the market rather than fundamentals - are again converging towards the analyst levels around £4. Ordinarily, my instinct, based on the following chart, would be a fall to around £5 - £5.20, which would probably mark a partial re-entry zone for me. However, the gap at 386 has bothered me since it formed in June and it is very close to Exane’s autumn value. So I probably wouldn’t simply pile in immediately- but progressively build a holding whilst watching , waiting and trading depending on how things turn. 450 would also come onto the radar if it falls below 500. Anyway, GLA on this tricky path.

https://invst.ly/13174z

Taverham:

There are some very obvious and major differences between OCDO and JD, not least that OCDO retail operates in a 'low margin' groceries whilst JD's market presumably has higher margins. Debt is presumably also an issue for OCDO (both are mentioned in the article I quoted from last June but I now find it's behind a 'register to view wall'). JD are not into the robotic tech - so not investing to the same degree. Whilst OCDO retail can be compared to similar retailers, the Group cannot - which is why the end of Feb FY results should throw much more light than yesterday's trading statement.

I certainly agree with Chilting's observation: 'any company that hasn't reached its full potential is difficult to value, not just Ocado.'

Sorry things aren't going well for you Gioviano and Retire.

It's not great to see the price drop back into the downward trend https://invst.ly/130-i7

Which is why I posted about the difficulty of arriving at a realistic valuation of OCDO.

There are a range of views expressed on this board - some obvious rampers and de-rampers along with more genuine investors, some overoptimistic and some more cautious . I moved into the latter category when I first exited at around 960p in August and am glad I jumped out again more recently.

I 'm still interested but my target entry point would upset people if I stated it. I do find that Valueplay's posts, which are invariably supported by facts/evidence provide a useful balance to some of the enthusiasm. I think OCDO could yet prove to be a good LT investment but in the short term I see it as a pure trading stock.

Yes indeed, dananzi. I added. Let's hope the blue line holds:

https://invst.ly/130-6f

Regarding 'Speculation on $110 a barrel but no conviction on this from the majority of analysts' , GfG, It's interesting that higher OP - and even the maintenance of its present level - currently seems dependant on global conflicts of one form or another. Absent these circumstances, if the supply and demand equation was operating naturally in a stable global trading environment, it does appear that US Shale production would again be driving OP down and that KSA, as head of the unruly OPEC cartel, would yet again be engaging in a battle to maintain market share. Over the last decade this has inevitably driven OP down to unsustainably low levels causing the boom & bust cycles in the US. The difference this time, however, might be the fact that the debt-laden shale producers, that had to pump ever more to survive as OP fell, have largely been eliminated - so OP might simply fall to a lower compromise between OPEC and US Shale, which I guess might be around $60.

The market doesn’t seem to know how to value OCDO - after 20 odd years developing the business and associated technology and 13 and a half years on the stock market. it has never yet, to my knowledge (DYOR), paid a dividend - is there any sign of it doing so? So capital gain is the only reason for buying the shares yet it’s still about 50% above the Exane and Barclays analyst targets of Sept/Oct . It’ll be interesting to see if those assessments get revised this year after the FY results for the whole group -not just retail - are published on 29th Feb.

Meanwhile it‘s worth reflecting on whether OCDO has moved on significantly since this article appeared in The Grocer last June, when Exane had uprated it from ‘underperform’ to ‘neutral’ at 365p: https://www.thegrocer.co.uk/finance/ocado-gets-vote-of-confidence-with-much-better-outlook/680318.article

These points, amongst others, were raised in it: Ocado “still has a lot of proving to do”, noting questions around its ability to move into non-grocery automation, whether partners will order sufficient capacity to reach break-even and how to refinance its debt due in 2025 and 2026.

Since late September the red trend here has kept a lid on OP:

https://invst.ly/12-stx

In December OP punctured the blue trend that has marked the bottom for Brent for nearly three years, with green marking the recovery path. However, the pressure remains whilst red remains unbroken. Which trend will prevail? We’ll know by February.

Yes indeed GaFG: the net effect has been for OP to return to within $0.5 of last Friday’s LSEx close, at $78.5. The Oil Co sp’s, however, take a more cautious track and usually smooth out the volatility tending to drop quickly and recover more slowly. So this week’s summary chart looks like this: https://invst.ly/12-805

I did add during yesterday’s lows and am now ‘overweight’ in Shel but at a very healthy net cost per share given my trades. I will add more if the opportunity looks right. https://invst.ly/12-88z

Yes indeed StockNor - I am not a shorter and buy shares to keep long/medium term or to trade quickly if the gain justifies it. However, I always take note of shorting activity and, if detected, will use the patterns it creates to inform my decisions . I am constantly surprised at how LTH's who post on LSE seem not to grasp how professional shorters operate and that an increase in sp is not necessarily bad news for them- after all, institutional shorters obviously buy back at lows and profit quite handsomely if the price rises sufficiently for them to 'rinse and repeat' the process multiple times. On a commercial scale they rarely come unstuck and I don't bet against them, nor do I resent the activity: for me it sorts out inflated sp's and generates better prices.

Whatever triggered it - it.s back into the wilderness and rejoining the downward slope: https://invst.ly/12zza7

It's 'wait and see' time. Gap filled so one risk gone, next week's update is the next box to tick for me, Gioviano.

610, 550 and 500 look like the next obvious steps down - but your 520 is on the green trend here:

https://invst.ly/12zyvr

I still think it's overpriced but the market clearly thinks otherwise - that's why I'm keen to see reaction to the update before deciding on reentry.

Or, perhaps this: RBC cuts Ceres Power to 'underperform' (sector perform) - price target 150 (600) pence

Good advice from Mary here:

‘Anyone who buys on the basis of an LSE post or sells on a similar basis really should not be investing’.

Investment decisions should be made on the basis of facts, realistic assessments and balanced judgement - not emotion, unfounded belief or faith. PFC may ultimately be worth more than the current market valuation or it may be worth less - LTH’s should not dismiss cogent comments from shorters and vice-versa. The rest is just noise.

Professional shorters seek out stocks that appear to be over-priced on the basis of fundamentals and drive the price down. The fact that this can be painful for LTH’s does not make the shorters wrong. In any case, the ‘villain’ in this piece may well have been Schroeders who, according to their TR-1 submission which landed forty days after the reported threshold was crossed, were selling prior to December - possibly from 12th October, when the price began to fall sharply and the daily volume of transactions started to climb. Their declared disposals to December, of approximately 5.7% of shares compares to just 1.4% of declared shorts on Oct 11th (according to shorttracker). Their tardy submission kept the disposals secret from PI’s during December’s recovery from 17 to 40p - a potentially profitable trading period for them.

I agree Tep.

It’s worth keeping an eye on Brent, climbing to $79 at the close today.

It was at the same price on Dec 1st when Shel closed at 2568 : https://invst.ly/12zmx5

(follow the orange lines). Also note Shel’s performance against BP, XOM, CVX.

Shel’s sp is therefore about 124p down relative to Dec 1st, around 5%, whilst CVX is about level, XOM and BP are each down about 3% compared to their respective prices on that date.

As you say there is a seasonal pattern that runs underneath other market influences and is sometimes hidden. Q1 often sees some strengthening in both OP and the oil companies' sp's.

As I understand it, a TR-1 declares the date when a given threshold is crossed: share disposals could be in progress prior to that date and may well continue after it, until the next threshold is crossed.

According to the form itself, PFC were notified on 1st December (section 6). However PFC make it very clear within the header that they did not receive the form until 9th Jan, a considerable delay, which suggests that they were either not informed as stated in the form or that they were unable to issue a statement about it for some reason.

Whatever the reason for the delay, it seems very convenient given the Business Update RNS issued on the 4th December, which might have had less positive impact had the TR-1 details been published in a timely manner

Heading for the gap-fill around 655?

https://invst.ly/12z64k

Disclosed short positions are less than half what they were last June - when the sp fell below 380, so reasonable grounds for confidence despite the pull back prior to the trading update. Profit taking ahead of the unknown perhaps?

I don’t think you’ve missed a great top-up opportunity yet, EnglishmanAbroad.

I’ve not seen a bounce either - other than the very brief trading swing on Monday when I decided to take a small punt. The daily chart is still heading down at pace:

https://invst.ly/12z3uf

Interestingly. the sp is continuing downwards whilst OP has been travelling the opposite way since Monday afternoon, as this 15’ trading view shows:

https://invst.ly/12z3wz

As I’ve said: I’m looking for more definite signs of a reversal (ie breakout from the red trend) before contemplating a further buy. I think it may be headed for the lower blue here:

https://invst.ly/12z407 , which would place it around 2390 currently or possibly even lower. The update obviously wasn’t well received by the market and the coincidental OP news (KSA price cut) appears to have masked the immediate reaction.

I doubt that Biden will 'subsidise' oil production, Clued. The shale guys are doing alright and serving his purpose without any help.

WTI at $65 would do the trick politically- something of a 'sweet spot' I reckon, with Brent around $5 higher at $70+ , which is enough to support the sp at a base level of 2250-2300.

It's worth bearing in mind that January tends to be (but isn't always) a seasonal low period for OP.

Trends, by definition, take time to establish.

Shel’s current short-term trend - which is naturally related to global markets, OP and company specific news - is currently downward as this ‘15 minute’ trading style chart illustrates: https://invst.ly/12yi98

Although I added at around 2520 yesterday, I did so in the entirely prospective anticipation that the sp would find support around 2500: https://invst.ly/12yk4a .

2480 may yet hold but, being well into trading profit this financial year with Shel, I won’t be adding any more unless I see a credible reversal at an attractive lower price.

Yesterday’s fall in sp tightly tracked the drop in OP, https://invst.ly/12y4sy

at a ratio of approximately 33x (sp £ to OP $) and also coincided with Shel’s slightly disappointing Q4 update note. The sp ratio to OP is currently very similar to the price relationship at the end of 2019, when KSA were cutting OP to put pressure on US Shale producers.

https://invst.ly/12y49n

Of course, COVID then struck - so the 2020 portion of the chart is not indicative of what we can expect in 2024. However it does suggest that Shel might drop to around 2240 if Brent continues to fall to $68.