RE:RE:RE:1.30JohnJBond wrote: Investing is about foresight not hindsight.
If I thought this one was going to $1.30 I would sold my position, and built a big short holding - as would every other investor.
The question is what to do now.
This is the same question we faced when it was trading at $3 and at $2.
In my case, I`m waiting for the next dividend payment, and will be spending that asap on additional LRE shares. I hope the price will be this low on Monday. I also hope this will be the last dividend I get for a long time.
The whole idea of a large dividend from oil and gas producers is a relic of the trustco format.
I find it rediculous that valuations are being determined by the size of the dividend, and the risk of a dividend cut.
A company`s value is based on its ability to generate cash flow and income, and its ability to grow both over time. Dividends reduce growth. Reduced growth, means reduced value.
The reason for LRE share price to decline is because its cash flow and earnings are expected to decline in the near term. The reduced oil price is going to cause a decline, but not the decline implied by the share price.
LRE should be trading at about 4x cash flow. That means its cash flow should be about 65 million. It is too hard to forecast cash flow with confidence presently, but $300 million ish is more like it, meaning LRE is trading at less than 1X cash flow, or about a quarter of what it should be trading for at current oil and gas prices.
Thats rather like buying cash at a discount - its a very rare occurance.
You and most here had no foresight, imagination or plan with regads to this stock.
It's frustrating for me to read these type of comments while 4 weeks and up to 1 week ago I warned you guys about the upcoming sell off. I guess you and others have me on ignore, like I said ignore me at your own peril but shame on you. If you lost 10, 20, 30 and up because you chose to ignore my warning and rants - shame on you, because you didn't agree with what I said and a cheerleader - shame on you.
I practically gave you all a playbook all you had to do was hit sell, sit on cash and heck buy it up here but at least you still had your money from 4 weeks ago or even a week when this was still worth twice as much.
Here's some tidbit - actually you're only part correct, the div has something to do with it but that's not the whole story. LRE has no choice now but to eliminate it, the likes of Surge, Baytex will have to do the same - they just kick the can down the road but they can't escape the inevitable of eliminating it to zero.
LRE's valuations is based on the underlying commodity as I said many times before (get that through all your thick heads) couple that with the size of its debt what you're seeing are tier3 companies in this space that will get dump first and the hardest before the tier1.
This is just the beginning, what you'll have next across all the oil companies are massive writedowns of assets by q2 of next year if oil doesn't rebound to 90-100 levels.
If you think you've seen a sell off just wait until these writedowns starts happening, even more valuations will get obliterated - 50% minimum and that's if you're lucky otherwise some of these will go to near zero level or close shop.
Again same on what happen with other commodities - gold/base metals, met coal, uranium, and now oil - with no exceptions.
Fundamentally - I don't see LRE going back to its former valuations - it has lost a lot and gaining it back is going to take a monumental bounce for oil and stay there for a prolong period. Technically - well there's nothing technical about it anymore.
It has lost support at 1.35, the likely support that this has now is 1. So if you like it at 1.35, you'll like it even better at 1 - that's where I'll be buying it up and even at 1 it's a gamble. Remember that another 10 days for tax loss selling is still here, if I were you guys I'd be hitting sell and take advantage of that - buy it back in 30 days and wait for things to settle.
Finally, I'm calling out everyone who told me I was wrong - you know who you are, shame on all of you. All I was trying to do was help.