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Ok, I'll try again. My last post was cut off halfway for some inexplicable reason.
Petrofac currently has numerous options to extricate itself from this unpleasant short-term situation. The currently sharply falling inflation and the interest rates, which are expected to be significantly reduced from 2024, will be very helpful for Petrofac.
Scenario 1:
https://www.cnbc.com/2023/12/13/fed-lowers-inflation-forecast-for-2024-seeing-core-pce-falling-to-2point4percent.html
"The Fed is expected to make at least three rate cuts in 2024 the “dot plot” of expectations from individual members of the Federal Open Market Committee (FOMC) suggests another four cuts in 2025, or a full percentage point. Three more cuts in 2026 would bring the key rate down to 2% to 2.25%, roughly in line with the long-term forecast, although there has been significant variation in estimates for the last two years."
Scenario 2: (UBS chief economist Paul Donovan is even more optimistic in his forecast.)
https://www.businessinsider.com/fed-rate-cut-outlook-economy-recession-forecast-2024-inflation-ubs-2023-12?r=US&IR=T
"The Federal Reserve will likely bring interest rates below 3% by next December, as a pullback in consumer spending will trigger a mild recession in 2024, UBS chief US economist Jonathan Pingle told CNBC on Friday.
This would imply more than 225 basis points in cuts, representing a much deeper Fed pivot than many on Wall Street expect, with markets pricing in about 150-175 points by the end of 2024."
These are fantastic prospects regarding a refinancing of their bonds due at the end of 2026, which is becoming increasingly likely based on this factor.
I would like to come back to the recent increases in short positions.
I think it could theoretically be possible that Helikon Investments is in possession of confidential information that is not available to us, and this is why they are so confident that they have increased their share again on December 28.
But I think in the end the matter will turn out to be much more trivial than some people here think and Helikon has simply speculated in a very risky way, with the potential for an x-fold loss, is now already in the red and now has its back against the wall .
In the current situation, they have no choice but to control the price by throwing even more skin into the game. Because they know that a spark is enough to trigger one of the biggest short squeezes in recent LSE history.
What would you do in the current situation if you were a small hedge fund like Helikon, with 3.3% of the company's stock, or 17.2 million shares, shorted, and things had developed so diametrically in the opposite direction?
With a share of around 10% (>0.5%) or 50 million shares, although the real share including
I must say that I was very pleasantly surprised when the award of the second Tennet 2GW project was announced before the end of the year. Not only because of the project itself, but especially because of the unexpectedly high share that goes to Petrofac.
I had always assumed that this would be split roughly 50/50 respectively (1.15bn $ / 1.15bn $) between Hitachi and Petrofac, but the current second one is 40/60 respectively approx. 0.95bn $ / 1.4bn $ which is much more than I had expected.
A small note: The individual 2GW projects follow a modular concept (design one, build many’ philosophy of the 2GW Program) the first of them serves as a blueprint, so the gross profit margin should increase over time.
As a reminder, a small excerpt from the hitatchi website
“As a pioneering technology and market leader, we are delighted to collaborate to deliver our HVDC solution for Nederwiek 1, combining world-class energy and digital systems,” said Niklas Persson, Managing Director of Hitachi Energy’s Grid Integration business. “Our strong collaboration with Petrofac, based on an agile business model, scalable solutions and synergies among projects, allows us to join forces and support TenneT in its ambition to accelerate offshore wind deployment in the North Sea, granting European citizens more sustainable and reliable power.”
“We have been working collaboratively with our partner, Hitachi Energy, and our client on the first project, Ijmuiden Ver Alpha. The award of Nederwiek 1 allows us to take the project to the next stage as we continue to focus on the standardization and harmonization of design and execution that will be central to the ‘design one, build many’ philosophy of the 2GW Program,” said John Pearson, Chief Operating Officer, Energy Transition Projects of Petrofac. “By aligning ourselves with TenneT’s objectives, we aim to create a blueprint for the rapid deployment of large-scale infrastructure projects like the 2GW Program, that will be crucial to Europe’s energy transition.”
It should also be noted that Additional projects within the TenneT's 2GW Programme are expected to be awarded approximately at six-month intervals. This should result in a continuous positive news flow in the coming months and years.
So rationally I am still positive but what does that mean in these irrational times.
Thanks for this interesting article
The last sentence in particular shows more confidence and that the problems can be solved with the help of Aidan de Brunner, an expert who specialises in steering companies through financial crises.
Excerpt from the article:
"Petrofac declined to comment to the MoS, but a source close to the company said the business 'has a positive future'."
Including less than 0.5%, the total is far more than 9.1%
according to Securities Finance Times from 06 Dec 2023
UK, energy service provider Petrofac (PFC) was the top shorted stock with 94.82 million shares borrowed and 18.16 pe cent of SI Outstanding.
if there is unexpectedly good news. The short squeeze will go from here to the moon. Or as our Frankie Boy sang so beautifully:
Let me sing among those stars
Let me see what spring is like
On Jupiter and Mars
Unexpectedly good news would be, for example, the sale of some non-core assets.
Or takeovers of adnoc, appollo etc.?
As a bonus Tennet 2 before Christmas.
But more likely only at the beginning of next year, as the elections in the Netherlands and the temporary budget problems in Germany have to be solved first.
Then, in my opinion, the German part of Tennet will be sold to the German government for 20 billion as planned. This will give Tennet the security to make investments until 2030 and beyond as planned.
Tennet 1 has already started and Tennet 2 - 6 will come as planned because time is running out.
Anyone who claims otherwise has no idea how the Netherlands and Germany work.
There are fixed revenues of around $7bn (Petrofac) or $14bn total (Hitachi/Tennet 50/50) by around 2030
And no one wants to go to Fiji?
It shouldn't be that difficult to find a Reuters article titled "Petrofac sinks to record low; analysts flag balance sheet concerns" Dec 1, 2023 at 11:54 am GMT
https://www.xm.com/research/markets/allNews/reuters/petrofac-sinks-to-record-low-analysts-flag-balance-sheet-concerns-53708671
If I understand correctly, there was no business at all today. At the moment you have to be careful. If I were a short, I wouldn't do this any differently and give you a completely unrealistic bid. This could simply be a tactic - the short ones would currently sell their own mother to be able to get a few more pence.
But the bond price is up 0.5% today to 45.5%.
https://www.boerse-frankfurt.de/bond/usg7052taf87-petrofac-ltd-9-75-21-26
even motley fools (they must really be fools if they don't verify their sources beforehand) refer to this fake reuters article.
the information it contains from a jp morgen analyst could theoretically be correct as it contains roughly what was published today.
except for point three, i have my doubts.
this reuters article simply does not exist.
the first person who can send me a link or a copy of the original reuters article
will get a case of beer, a trip to fiji and if the winner is sigle i will dress up in women's clothes and spend my honeymoon there with him. he can also keep my 285,000 shares.
i have written urgently to reuters and am still waiting for a reply.
i have also emailed the author (yadarisa shabong) who works at reuters and am still waiting for a reply.
i also wrote to jp morgen and they don't seem to care.
but it's also understandable, with the jp morgen analyst recommendations you normally can't even wipe your ****.
they just don't seem to care if someone posts some rubbish in their name.
i wonder what you can read next in a suspected fake reuters article?
jp morgen analyst says: king charles received an lseg score of 1 on a scale of 100 (very unlikely) to 1 (highly likely).
jp morgen analyst says: he will be replaced by prince william next year.
Let's see, if my suspicions are confirmed, I might just contact the English press with my accusations.
Do you have any good ideas about which one I should contact first?
Oh no, I'll contact everyone at the same time. Someone will get involved and publish the report.
The narrative should then be history that hedge funds or the short ones are good for the market because they point out financial problems at an early stage.
On the contrary, they use fake news to rape small investors and then leave them lying on the cold street in winter.
I can well imagine the headlines that this will generate.
I just noticed the link to www.tradingview.com too works again.
They are also liable to prosecution if they refer to an obvious fake.
https://www.tradingview.com/news/reuters.com,2023:newsml_L4N3CW2QN:0-petrofac-sinks-to-record-low-analysts-flag-balance-sheet-concerns/
So I have now informed: Petrofac, JP Morgen and Ms. Yadarisa Shabong (Reuters) that the article on XM.com is an obvious fake.
Let’s see if I get a timely feedback.
I definitely wouldn't want to be in the shoes of the person who published this article.