WASHINGTON, February 16, 2017 – Thursday trading action on Wall Street was for the most part so indecisive that at times, it seems as if traders and investors alike greeted the entire day with a collective yawn.
We simply moved cash around a bit in our accounts today, although we made one sale, of which more in a moment.
We almost sold our position in Marathon Oil (symbol: MRO) for a loss. Trading in these shares was dismal this week. The market seems to be telling us that this midcap, mostly domestic oil producer was going to report a worse-than-expected loss during Q4 2016.
But we gritted our teeth and held on. Happily (more or less) we were rewarded, as MRO reported a loss, yes; but one that was considerably lower than consensus, which gave a small kick to the company’s lagging shares. Today’s sideways market action took some of that away, but we continue to hold.
The company may actually get back to profitability some time later this year, which should give a nice boost to MRO’s per share price, but not quite yet. Better news, however, was Marathon’s announcement that it was giving a considerable boost to its 2017 capital spending plans, meaning that if there’s more oil in them thar’ shale basins, Marathon intends to get it out.
Better news still: the Trump administration’s go-ahead to resume the final phase of construction on the “controversial” Dakota Pipeline. (It’s controversial because the
global warming climate change eco-fanatics say it is.) Marathon does a fair bit of business in that area, which, of course, abuts on the Bakken Shale formation.
A completed Dakota Pipeline, transporting shale oil at a much lower cost than railroad transport, would lower the costs for Marathon and others working this formation, making their product cheaper and more competitive, pricewise, leading—ta da!—to better profits.
That means we’ll continue to hold onto our shares of MRO. We’re also holding on to holdings in Swiss gold bullion ETF SGOL, Canadian silver miner Silver Wheaton (SLW) and our small position in Newmont Mining (NEM), which specializes in gold and increasingly valuable copper. Just because.
As for that sale we mentioned a bit earlier—today we dumped our modest position in the shares of Sprint (S). The shares experienced a sharp downturn recently, a delayed result of the company’s reporting numbers that, while negative, were actually quite good for that periodic loser of a telecom provider. The play here is for some kind of takeover to happen, finally putting an end to Sprint’s long nightmare as an independent entity.
But if you look at the heat map graphic heading up our other column, you’ll note that telecom stocks themselves weren’t so hot today. In fact, they’ve been lagging for a couple of weeks. Rather than fighting the tape, when S was bid up a bit Wednesday and today, we took advantage of that action and made a quick exit for a small profit.
Right now, the markets are getting so toppy that stocks in general could experience a violent downdraft at any time. So our strategy is to exit our more tenuous positions now when we can.
We still think S is either going to merge with or take out some other telecom company, given the deep pockets of its majority shareholder, Japanese giant SoftBank Group (SFTBF). For that reason we may re-enter a position in Sprint if its price gets low enough, since we’d hate to miss that seemingly inevitable ride. But right now, the market is just too tentative, and we don’t want to take the chance we’d get caught with a big loss on a speculative stock like Sprint.
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