Baytex – Share Price Projections Longs, and momentum traders,
Here is a table using the 8x FCF specified by Eric Nuttal as fair value. The SP500 is considered fairly valued at 15x PE, and overvalued at 30x PE (Where it has been recently). These are frightening numbers for shorts. I used a 8x – 16x free cash flow range, plugged in the theoretical maximum for buybacks, in case there is a second, or third round of them. The share count used, was rounded to nearest million. Why 16x free cash flow? Because markets over react. The 16x number is similar to the 30x PE number, and if it is ever hit, would be a good time to sell, or sell very deep in the money calls, if you can find any buyers.
| FY | Free Cash Flow | @ 8x | @ 16x |
| 2021 | $400,000,000.00 | $5.71 | $11.43 |
| 2022 | $700,000,000.00 | $10.00 | $20.00 |
| ? | $900,000,000.00 | $12.86 | $25.71 |
| | $1,000,000,000.00 | $14.29 | $28.57 |
| | $1,100,000,000.00 | $15.71 | $31.43 |
| | $1,200,000,000.00 | $17.14 | $34.29 |
| | $1,300,000,000.00 | $18.57 | $37.14 |
| | $1,400,000,000.00 | $20.00 | $40.00 |
| | *1 | | |
| FY | Free Cash Flow | @ 8x | @ 16x |
| 2021 | $400,000,000.00 | $6.35 | $12.70 |
| 2022 | $700,000,000.00 | $11.11 | $22.22 |
| ? | $900,000,000.00 | $14.29 | $28.57 |
| | $1,000,000,000.00 | $15.87 | $31.75 |
| | $1,100,000,000.00 | $17.46 | $34.92 |
| | $1,200,000,000.00 | $19.05 | $38.10 |
| | $1,300,000,000.00 | $20.63 | $41.27 |
| | $1,400,000,000.00 | $22.22 | $44.44 |
*1 this lower table using 10% less outstanding shares.
The bold $10 is where I believe Eric acquired his price target from.
This is fuel for thought.
*** Bashers, and their narratives
More on basher / message board distorter behavior.
There was a discussion in the past, that I got to hear, where an unnamed person was describing how large financial institutions, and the financial advisors they work with, have people invest. Here is a short version summary.
Financial advisors don’t work for the masses, they instead cater to the large, preferred investors.
When a preferred investor needs to sell, it is a lot of shares, and a lot of money. There have to be buyers for this share sale to happen, and that is where financial advisors can help. They put “Average Joe” into the stock the preferred customer is selling. The “Average Joe” asks the financial advisor why the stock is going down, and the advisor replies, “don’t worry, you are investing for the long term. It will go up long term.” Does it look like the bashers are helping this sort of theme? As I see it YES, and on two fronts. More on this is coming.
There is not a lot more discussion on this topic required, to see why a lot of people stop using financial advisors, if they actively do their own research. For those who do not, they make their lesser profits, and think they are getting a good deal.
This is where I am going with this. There are two narratives the bashers have been using. The first is “the sky is falling, so sell”. The second is, “Buy dividend oil producing stocks, and sell Baytex”
I believe the tell in the second narrative is because institutions like to rotate from leaders to laggards, when they feel capital appreciation potential, is greater in the laggards. The sky is falling narrative is just to facilitate volatility, which makes it easier to accumulate free shares (Institutions), or inventory (Market Makers). By recommending dividend stocks, and attempting to get us to sell Baytex to buy them, they are getting 2 for 1, if only in their own minds. And why not, they are “LEGENDS IN THEIR OWN MIND”.
If anyone is reading something more into their narrative, I think it would serve the board well to post it.
Tepper went on CNBC, saying he covered his NASDAQ and Treasury shorts. It was probably puts, or shorting the box, and we get the message.
The Saudi Energy Minister has decided to state the obvious, in case people were not listening, when millions of people before him, said the same thing!
https://oilprice.com/Energy/Energy-General/Saudi-Energy-Minister-Insufficient-Investment-To-Blame-For-High-Fuel-Prices.html
My guess is we bought back 100,000 to 200,000 shares on 5/9/22. We will never know for sure.
Off to work now, a good day to most eveyone here.
RS