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Play Updates

In Play Updates and Reviews

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The current format of the Play Updates has changed. Only the pertinent data that has changed from the prior week will be shown in an effort to concentrate more on new commentary on new plays rather than restating existing positions. Each play has a link back to either its last full commentary or its initial description.

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BHP - $47.25 +3.09 - BHP Billiton

So far so good for our first week in this position. BHP said it had approved a $1.85 billion cap ex program to expand the iron ore operations in Western Australia to 155 million metric tons per year. The news pushed the stock to a new 10-month high.

To see the initial commentary on this position click here

Breakout target $43.50 hit March 12th

Position: JAN-09 $50 LEAP Call ZPK-AJ @ $6.00

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CCJ - $40.08 +3.22 - Cameco

Cameco held a conference call last Monday to discuss the progress at the Cigar lake mine and investors cheered sending CCJ to a new three month high over $40. No complaints here!

To see the initial commentary on this position click here

Breakout trigger: $37.50 Hit March 7th

Position: JAN-09 $40 LEAP Call ZBK-AH @ $7.80

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PTR - $112.40 +2.09 - Petrochina

PetroChina released earnings last week and profits rose +6.6% on a revenue gain of +24.8%. A +34% increase in expenses kept profits in check. This is a communist country and a government owned entity. Expecting rampant "reported" profits would be an unreasonable expectation. CapEx spending was projected at $24 billion in 2007 or $9 billion more than Exxon in 2006. The news was enough to send PTR to a new two week high. We need to take these small gains as a gift and a stepping-stone to the bigger ones in our future. No change in play.

To see the initial commentary on this position click here

Breakdown targets:
$110 1/2 position - hit Mar-5th
$105 1/2 position - not yet triggered

Position: JAN-09 $120 LEAP Call ZJK-AD @ $10.70

Cost reduction play:
Position: Short June $105 Put PTR-RA @ $3.40, stop $100

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SNP - $83.19 +7.82 - Sinopec

Now that is the stellar gain we knew Sinopec was hiding. The rebound took it to a new 5 week high on strong daily gains. No news and no change in play.

To see the initial commentary on this position click here

Breakdown target $82.50 hit on 2/27

Position: OCT $85 Call SNP-JQ @ $7.00

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THE $40.92 +8.14 - TODCO ** Closed **

The news of the Todco buyout by Hercules Offshore was about the worst news we could have gotten. The $42 offer was a 30% premium to the closing price the day before but it was well below our strike price of $45. That effectively killed our LEAP within seconds of the announcement. With a $42 acquisition price the odds of Todco moving over $45 by 2009 are nearly zero. With no long term upside expectations the premium in the LEAPS evaporates instantly. We took a beating on THE and there is nothing we can do about it.

To see the initial commentary on this position click here

Earnings: March 1st, $1.11 vs .34 cents in comparison quarter

Current recommendation: Hold

Breakdown target $39 hit 12/7/06

Position: 2009 $45 LEAP ZYU-AI @ $8.40, exit $3.40, -$5.00

Insurance Put: None

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CHK $30.76 +1.19 - Chesapeake Energy ** Stop loss $28.50 **

No news and no change in play.

To see the initial commentary on this position click here

Earnings: Feb-23rd, 90 cents vs est 76 cents.

Current recommendation: Hold

Position: 2009 $35 LEAP VEC-AG @ $5.30

Insurance put: none

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MRO $101.12 +7.83 - Marathon Oil

Marathon powered to nearly an $8 gain for the week on the strength in gasoline prices and the falling oil prices early in the week. Crack spreads were soaring and so was Marathon hitting an all time high at $103. No change in play.

To see the initial commentary on this position click here

Earnings: Feb-1st 3.06 vs 3.43 (Q4/05) $1.08 billion profit

Current recommendation: Buy at $85

Position 2009 $100 LEAP Call VXM-AT @ $12.60
Cost update: Expired March put +65 cents to $13.25

Insurance put: 2/18/07
Position: March $85 PUT MRO-OQ @ 65 cents. expired

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HES - $55.98 +5.53 - Hess Corporation
(Formerly (AHC))

The selling pressure from the prior week evaporated and Hess came very close to a new all time high over $56. Definitely no complaints and no change in play.

To see the initial commentary on this position click here

Earnings: Jan 31st, $1.13, vs $1.44 in Q4/05, 230% replacement

Current recommendation: Buy at $477

Position:
11/05/06 2009 $50 LEAP Call VHS-AJ @ $6.80
Cost adjustment put exit +1.60, cost = $8.40

Insurance Put: Triggered Jan-3rd @ $49
01/03/07 May $45 put HES-QI @ $2.60, exit 1/26 $1.00

Insurance Put: 2/26/07
MAY $50 PUT IGG-QJ @ $1.35, profit stop $46

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BTU - $40.84 +2.89 - Peabody Energy

After 3 weeks of wandering near the bottom BTU finally found a spark. We are still well below a breakout but the $3 gain was inspirational. BTU announced it was expanding its office in China. No other news.

SELL JAN-08 $30 PUT LLW-MF is BTU touches $35

To see the initial commentary on this position click here

Earnings: Jan-25th +42% including special items.

Current recommendation: Buy at $35

Position:
10/22/06 Jan-2009 $50 LEAP Call ZZT-AJ @ $8.70
02/05/07 March put stopped -$1.00, cost = $9.70

Insurance put: Triggered with drop through $39
01/03/07 March $35 Put BTU-OG at $1.15, stopped @ $42.50

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SLB $69.10 +4.62 Schlumberger

In an interesting contradiction of events SLB gained +4.62 last week while Halliburton was knocked for a substantial loss after an intraday earnings warning. HAL was knocked for a -10% loss after warning that slowing drilling in North America would knock up to a dime off its earnings. This was midday on Tuesday and all the service companies were knocked for a loss. SLB immediately rebounded and end the week with a strong gain and a new 52-week high. Good companies succeed and lousy companies make excuses. No change in play.

SELL JAN $55 PUT WUB-MK on a touch of $60 by SLB

To see the last full commentary on this position click here

Earnings schedule: Jan 19th, +71% to $1.13 billion

Current recommendation: Buy at $60, stop at $55

LEAP Position:
1/2 9/11/06 @ $8.60
1/2 9/12/06 @ $8.00
Position: 2009 $70 LEAP Call VWY-AN @ $8.30
Cost update for expired Jan put +2.00 = $10.30

Insurance Put: 9/18
Position: Jan $50 Put SLB-MJ @ $2.00, expired

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SUN $71.16 +5.26 - Sunoco

SUN hit a new six-month high on Friday and posted a nice string of successive daily gains. It is simply a refiner story and we are not complaining.

SELL JAN $55 PUT WUD-MK on a touch of $60 by SUN

To see the last full commentary on this position click here

Earnings: Jan-31st, -57% $1.00 vs $.96 analyst est.

Current recommendation: Buy at $60, stop at $54

LEAP Position:
9/12/06 Position: 2009 $70 LEAP Call VUN-AN @ $13.50
Cost update expired Jan put +2.40 = $15.90

Insurance Put:
Position: Jan $55 Put SUN-MK @ $2.40, expired

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VLO $63.65 +3.64 - Valero Energy

Valero hit a new 7-month high and there is no change in sight. Refiners are printing money on the rising price of gasoline and that is not expected to change. $3 gas this summer will mean golden profits for Valero. No change in play.

To see the last full commentary on this position click here

Earnings: Feb-1st

Current recommendation: Buy at $50, stop at $45

LEAP Position:
9/24/06 Position: 2009 $60 LEAP Call VHB-AL @ $7.70
Cost update expired Jan put +2.25 = $9.95

Insurance Put:
Position: 9/25 Jan $45 Put VLO-MI @ $2.25, expired

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DO - $81.40 +5.28 - Diamond Offshore ** Stop $73.00 **

The acquisition of Todco by Hercules and comments by RIG convinced investors that further consolidation in the drilling sector was still ahead. With Diamond the leader in deepwater they will probably be an acquirer rather than acquired. No change in play.

To see the last full commentary on this position click here

Earnings schedule: Feb-8th

Current recommendation: Buy at $75, stop at $69

LEAP Position:
8/29/06 Position: 2009 $80 LEAP Call VCT-AP @ 14.20
Cost reduction: Oct $70 Put profit -3.15, cost now $11.05
Cost increase: Dec $60 put expired -2.40, cost now $13.45

Insurance Put:
10/08 Dec $60 Put DO-XL @ $2.40, expired

Position closed:
10/03 October $70 put DO-VN @ $1.65, exit @ $4.80, +3.15


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Non-Energy Positions
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