Sunday, November 3, 2019

Sunday Morning, Notes From All Over, Part 1 -- November 3, 2019

First things first: the week in pictures.

Years Of Offshore Investments Could Be Valueless -- Rystad

Oil, offshore: "everyone" seems to remind us that there's no money in fracking. That may be. But it turns out it's just as bad offshore. From Rigzone:
  • Rystad evaluated all offshore oil fields sanctioned since 2010 and ranked them by estimated value per barrel of oil under various oil price scenarios
  • offshore projects sanctioned between 2010 and 2012 have “barely been able to generate any value”  
  • projects sanctioned between 2013 and 2014 are “expected to have no value creation”.
  • for upstream companies to come out of the 2013-2014 investment years without “massive losses”, the oil price will need to increase to around $70 per barrel.
  • Rystad said value creation is positive for sanctioning between 2015 and 2018, even when applying a future oil price of only $40 per barrel.
I think there might be a huge analogy here with shale. I'm thinking of the prices paid for the Permian between 2010 and 2016.


MSFT: DOD JEDI win is huge; will be even bigger. Link here. The bigger story: the company that did not get JEDI. This was a no-brainer.

Ford: needs to find a horse it can ride and stay on it. This is getting tedious, but maybe the third time is the charm.

CROCS: wow, who wudda thought? Which stocks have been leading the big 3Q19 earnings rally? Quick: which ticker symbol seems out of place: FB, AAPL, TSLA, INTC, BAC, PYPL, CROX.

The bigger story: same link as above. Remember all that hand-wringing about 3Q19 earnings. Well, here we go again:
We are now about halfway through the third-quarter earnings season, and the numbers so far have been much, much better than expected.
Roughly 80% of companies that have reported earnings have reported better-than-expected earnings. And they’ve been topping profit expectations by about 4%, on average.
Meanwhile, 64% of companies have reported better-than-expected sales, with sales coming in about 1% above estimates. Broadly, then, the third-quarter earnings season has been really good.
So good, in fact, that it’s a big reason why the S&P 500 has surged to all-time highs in October.
Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. 

Starbucks -- the new community library: a month or so ago, Starbucks quit selling hard copies of the WSJ, NYT, and the local newspaper. A few of us were disappointed. But again, Starbucks made it right. Logging into Starbucks in their coffee shops, one has access to any number of newspapers otherwise behind a paywall. When first announced a month or so ago, Starbucks had access to four national newspapers. Look at the list now. I'm most thrilled to have access to Barron's. This is quite remarkable. I understand that this "freebie" may be limited in time and that Starbucks could monetize this within a year. I hope not.

Warren Buffett loves newspapers:
  • Starbucks enterprise value: $110 billion.
  • Berkshire Hathaway cash on hand: $130 billion.
  • Apple cash on hand: $210 billion.
  • A Berkshire Hathway - Apple joint venture to buy Starbucks seems like a no-brainer
  • not in that list above: Omaha World-Herald, Kansas City Star
  • the Fort Worth Star-Telegram makes the list; the Dallas Morning News does not. 
  • neither the Washington Post nor The New York Times makes the list 
  • the more you look at this list, but more it looks like it was hand-picked by Warren
  • somewhat apocryphal: where did Ernest Hemingway get his start?

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