Special Sale on Deepwater Drillers
While I have decided to stay away from any of the companies that are directly involved in the Gulf spill, I recently have become very interested a number of drillers and I added several of them to my CAPS portfolio a week or so ago. These companies became significantly more attractive this morning after they were downgraded by Goldman Sachs:
Deepwater Drillers: Analysts Cut Bait
Goldman Sachs analysts led by Daniel Boyd say they’re now expecting the current six-month moratorium to stretch into 12 months. Things could be slow enough that drilling activity won’t be substantial again until 2012. With that in mind, Boyd removed his firm’s “buy” rating on shares in Transocean and Noble Corp., and hacked 28.7% and 15.5%, respectively, off Goldman’s estimates for each company’s 2011 earnings per share. A “sell” was slapped on Diamond Offshore and Atwood Oceanics, which also took similar estimate cuts.
If only I had added ATW to my CAPS portfolio this morning instead of late yesterday @#$%^* :).
Goldman probably winked at someone through a hole in its special firewall that it put up between its analysts and traders and issued the downgrade so that its prop desk could snatch up shares of these companies on the cheap...kidding (only somewhat).
So GS thinks that it will take six months to a year longer for these businesses' drilling activities to ramp back up after the Gulf moratorium. Six months to a year? That's it? Why would you sell a company for a temporary blip on the radar like that? Oh that's right, most of the trades on The Street nowadays last tenths of a second. To me, companies in this sector that have solid balance sheets are buys today.