Statoil (ADR) (NYSE:STO)

CAPS Rating: 4 out of 5

An integrated oil and gas company, headquartered in Stavanger, Norway which is based on both production and reserves.


Player Avatar EllenBrandtPhD (< 20) Submitted: 8/17/2013 3:09:32 PM : Outperform Start Price: $20.67 STO Score: -36.47

US and Canadian investors don't understand this yet.

But this is now a very strong "Event" stock, the Event being the upcoming Norwegian elections, now only 3 1/2 weeks away..

If you think the Socialist incumbent, Jens Stoltenberg, is somehow going to pull a rabbit out of a hat and survive, you should be Short STO and Short the Norwegian Krone (NOK). (And possibly, you are Dick Morris.)

But if you believe pretty much every single poll taken the past six months and think the Christian Democrat - i.e. pro-business - challenger, Erna Solberg, is likely to win, you should be (very) Long the NOK - since she wants a much stronger one - and (very) Long STO.

Solberg has not only vowed to slash corporate taxes and investment taxes, she has made it a campaign plank to spin off another 25 percent of the Norwegian government's current STO stake, which is about 3/4.

She has vowed to do this at a "very good price," which many have interpreted as a minimum $30 in US terms today. But note that as the NOK strengthens, if it does, the US stock gets an added currency effect, meaning that $30 minimum could turn into a $33 or a $35 minimum.

And the spinoff could happen pretty fast, as it is likely all the key Sovereign Wealth Funds, plus others, will be very interested.

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