BP p.l.c. (ADR) (NYSE:BP)

CAPS Rating: 4 out of 5

BP is all things oil and gas. From exploration to refining and selling, it’s among the world’s largest integrated oil companies.

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Player Avatar JohnCLeven (76.85) Submitted: 2/26/2013 1:16:54 PM : Outperform Start Price: $37.16 BP Score: -25.16

1. BP has normalized ROE is about 18%-23%, and it's selling for 1.5x tangible book value, and 56% BELOW it's Graham number. 2. Seth Klarman is a buyer around $40 and BP is now Baupost's largest position, per gurufocus.3. A 5.3% dividend yield...WOW!

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Member Avatar ElCid16 (96.93) Submitted: 9/10/2014 11:53:35 AM
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I've come full circle on BP. You and I had some banter about a year ago on why BP was/wasn't a good investment. I took the "wasn't" side and you took the "was" side.

But now, I see BP (trading at book value) as a safer investment than the other oil majors. ROE for these companies is in a 10 year rut. Even if ROE creeps back toward the median of the past 10 years, let alone the high end of the past 10 years, investors might be very willing to pay 1.5-2.0 times book value for BP.

Even if multiple expansion takes a few extra years or doesn't come to pass, BP is growing book value per share by 7-10% per year in addition to it's 5% dividend yield. An investment right now could yield 10-15%, regardless.

I still think XOM is a great investment, too (growing book value 10-15% per year, while paying a 3% dividend) - however, it's trading at 2.4x book. The margin of safety just feels higher for BP right now.

Sorry to ramble. Best of luck.

Member Avatar JohnCLeven (76.85) Submitted: 9/11/2014 10:36:53 AM
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That was a good reply, not rambling at all.

thanks~

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