Just some quick thoughts as we close out the quarter. When I last wrote about Blue Nile (NILE) on 17 May 2010, the stock price was near $50.50. At the time, I expressed bullishness with concerns about Europe. Since that time, the financial news has been dominated by European woes, yet Blue Nile remaining relatively strong, closing today at just over $47.00. Moreover, the U.S. is experiencing a horrific environmental catastrophe in the Gulf of Mexico that is adversely affecting those living along the Gulf Coast. And, as we have seen, June's job release was disappointing. Given all these negative factors, I am surprised that Blue Nile's stock is doing as well as it is. If Blue Nile's upcoming earnings release is reasonable, then bears will have even more challenges.
I am surprised by the low stock value of Exxon Mobil Corporation (XOM). While some might point to its takeover of XTO, XTO was less than one-tenth the size of ExxonMobil. In other words, even if it overpaid for XTO, it does not deserve its current low valuation. And, there are rumors that ExxonMobil might buy BP p.l.c. (BP). I doubt strongly that ExxonMobil is interested in acquiring BP. There are too many unknowns in terms of environmental damages and costs. Moreover, because BP is an important crown jewel in the United Kingdom--according to Wikepedia on BP, BP is its largest corporation--ExxonMobil does not want to get involved in the political considerations.
On the positive side, in looking at the Wall Street Journal's Market Data today, I note that ExxonMobil led the Money Flows: Buying on Weakness. For total money flow, $176.66 million flowed in. That is, $414.93 million were bought on an uptick versus $238.27 sold on a downtick. The up/down ratio is 1.74. If we look at block trades, it is even more impressive with $188.75 million bought on an uptick versus $11.88 sold on a downtick. The up/down ratio is 15.89. ExxonMobil sports a dividend yield over 3%, has over $32 billion in long term investments, and, according to Yahoo! Finance, has a forward pe of less than 8.5. Oil prices are reasonably strong and forward curve indicates future strength. I view ExxonMobil's current stock price as a bargain.
Those wanting more information on the XTO transaction should listen to ExxonMobil's conference call on 8 July 2010. Below is a quote from a recent news release.
ExxonMobil will conduct an analyst conference call on Thursday, July 8, 2010 at 11 a.m. Eastern Time (10 a.m. Central Time) to discuss the transaction (URL will be available at www.exxonmobil.com).
The slides to be discussed during the call will be available at www.exxonmobil.com for viewing and download starting at 10:45 a.m. Eastern Time (9:45 a.m. Central Time) on July 8, 2010.
Audio Webcast Participation
Listen Only Numbers:
Domestic: 877-780-3379
International: 719-325-2269
Confirmation Code: 9648931
Disclosure: I am long Blue Nile shares; long ExxonMobil shares, and long and short puts in ExxonMobil for an overall net long position.
On Wednesday, 23 June 2010, I worked with a model Anya in Banff National Park. When I say worked, she was kind enough to allow me to practice my photography skills. If you click on my Flickr profile link, you will be taken to Flickr where you can see more of my pictures.
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