Close EOG short: 40%-pts better than S&P 500 over 6.5 yrs 2 March 2022
Since 7.21.15, the EOG short has out-performed an S&P 500 short by 40 percentage points.
Given the rise in oil prices and EOG's geopolitcal advantages, closing the EOG short idea after 6.5 years.
On fundamentals, note that EOG's equity per share only increased from $31.6 at March 2015 to $38.3/shr at Dec. 2021 + $10/shr dividends. $16.7 return over 6.5 years on a $77 stock works to only 3% per year CAGR ignoring share movements. Overvalued treadmill.
7.21.2015 EOG: $77.33/shr ; S&P 500: 2119
3.1.2022 EOG: $116.41 + $10.05 dividends = $126.47 ; S&P 500: 4306
So EOG short lost 63.5% which was 40%-pts better than the 103% an S&P 500 short would have lost.
Long S&P 500 and short EOG would have gained 24%, or CAGR of about 3.3%/yr over 6.5 yrs.
Original posts:
https://stockhouse.com/members/investmentitos/bullboard-post-history/
i
July 22, 2015 - 07:32 AM
347 Reads
Post# 23947633
Short at $77.33
My dear fellow investor:
I've been mulling on EOG.
EOG looks like a short just based on how little its shares have declined as compared to the % decline in its fundamentals:
EOG share price is only down 22.7% compared to its $100/shr price before the oil price started declining in Sept. 2014.
meanwhile:
- WTI crude is down about 50% to $50 for current contract. (this is EOG's main reference price for its oil, from which it derives the lion's share of profit). Q1 2015, realizing $46.7/barrel (vs $100.6 in Q1 2014)
- But EOG fundamentals have suffered much more:
EOG Q1 2015 net income down 125% vs Q1 2014 to a loss of $170 MM. Operating income down 116%, and Cash from Operating Activities down 57.6%.
- Meanwhile thier capex is only down 20% in Q1 2015 vs Q1 2014, so they aren't reducing spending nearly as fast as their profit has declined. They probably don't dare to reduce capex too much lest they reveal to the street what the decline rates really are on their Eagle Ford fracking play.
Just based on these issues I'd have expected at least a 50% decline in share price to $50. But is it really worth anything at current oil prices? It could be a near-zero sitiuation except as option value on oil going way up and staying up. EOG is a total speculation on the future price ot WTI crude - except at $77.33 its already factored in to EOG's high and unsinkable share price. Even looking further out to Dec. 2017, the WTI price is only $60, so the futures market is telling you not to buy EOG. If you think crude is going back up then buy oil futures, not EOG.