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(B)(N) TLM Talisman Energy Incorporated

July 23, 2014
Courtesy: TLM Talisman Energy Incorporated

Courtesy: TLM Talisman Energy Incorporated

Deal Book. Investors want “more” – they want higher stock prices for the stocks that they own, and more dividends if the company pays dividends, even if the company doesn’t make any money.

Which is fine. We understand that and we would be “confused” and “dysfunctional” if we thought that investors want “less”, or even that they should have less, which many non-investors are wont to believe.

However, notwithstanding that thought, which we need to keep in the forefront of our mind, that “investors want more”, real investors are willing to pay more for less, which they can do if they’re not conflicted by a need for liquidity, or a particular need for income, or an aggressive margin account, which is often the case with investors who want more, now, because they really need more, now.

As a result, patient investors who have been buying and holding the stock of Talisman Energy Incorporated at prices between $10 and $12 for the last two years, got a 10% raise today – in addition to their 2.8% dividend yield – from investors who wanted more, and gave it to each other because it seems doubtful that the real investors would be bailing for a dollar, now (Reuters, July 23, 2014, Talisman says approached by Spain’s Repsol about deal).

We’re don’t know how this will work out; there are a lot of hurdles and Talisman is primarily a natural gas producer in Canada, and Repsol would prefer more oil in familiar locales; the company is not currently in The Perpetual Bond™ because it’s been trading below the price of risk, which we estimate as $12, and it has a downside in the price volatility of minus ($1) off $11 in the next quarter; please see Exhibit 1 below for more details.

Alice's Adventures in Wonderland, Lewis Carroll, 1865

Alice’s Adventures in Wonderland, Lewis Carroll, 1865

And we’re certainly not “jumping in now” because, in our view, “investments” need to demonstrate three things – 100% capital safety, 100% liquidity, and a hopeful return above the rate of inflation – and anything that doesn’t have those three things is just a gamble, and there are lots of those, and the prices are almost invariably bid-up by “investors” who want more, need more, now.

Exhibit 1: (B)(N) TLM Talisman Energy Incorporated – Risk Price Chart – July 2014

(B)(N) TLM Talisman Energy Incorporated - July 23 2014

(B)(N) TLM Talisman Energy Incorporated – July 23 2014

Talisman Energy Incorporated is an oil and gas Company. Its main business activities include exploration, development, production, transportation and marketing of crude oil, natural gas and natural gas liquids.

From the Company: Talisman Energy Incorporated, an oil and gas company, explores for, develops, produces, transports, and markets crude oil, natural gas, and natural gas liquids. It holds interests in various oil and gas properties located in Canada, the United States, Malaysia, Vietnam, Papua New Guinea, the United Kingdom, Norway, Algeria, Colombia and the Kurdistan Region of Iraq, as well as in Australia/Timor-Leste. The company was founded in 1925, has 2,800 employees, and is headquartered in Calgary, Canada.

For more applications of these concepts please see our Posts which rely on the Theory of the Firm developed by the author (Goetze 2006) which calibrates The Process to the units of the balance sheet and demonstrates the price of risk as the solution to a Nash Equilibrium between “risk-seeking” and “risk-averse” investors within the demonstrated societal norms of risk aversion and bargaining practice. And for more on The Process, please see our Posts The Food Chain and The Process End-Of-Process.

And for more information on real “risk management” and additional references to the theory and how to read the charts and tables, please see our Post, The RiskWerk Company Glossary; we’ve also profiled hundreds of companies in these Posts and the Search Box (upper right) might help you to find what you’re looking for.

And for more on what risk averse investing has done for us this year, please see our recent Posts on The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class actionLa Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100. And for more on what’s Working in AmericaBig OilShopping in America or Banking in America, to name just a few.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond
Alpha-smart with 100% Capital Safety and 100% Liquidity
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

 

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