I have sold about half of my holding in Lamprell at 142.59. This takes me down to a small portfolio weight of about 4-5%.
Lamprell are a firm who build jackup rigs – used in oil exploration. I bought them most of them back in 2012 at prices of 82/83p, I bought a few in the rights issue and a handful more at 147. My average cost is 100p.
I bought in as Lamprell bought a lot of yards before getting into financial problems.These are big expensive fixed assets which will have value. I thought that at a price in the 80s didnt take account of these assets. I also thought that the company would recover – as I recall the issues occurred due to problems pricing and delivering contracts. This is a share which fell from 300p in 2011.
I have decided to ease up on this as the oil price has fallen quite a bit from $110 to $82. This makes exploring for and developing oil fields much less worthwhile. This obviously will have a disproportionate effect on Lamprell.
It should be remembered that the oil price is determined by the intersection of the marginal buyer and seller. Shale oil seems to have increased supply pushing the price of this last barrel of oil down. In conjunction with this the softening of economies over the past 6 months seems to have impacted the marginal buyer.
Counterbalancing this building jackup rigs worth several hundred million obviously requires confidence on the part of customers. As Lamprell continues to deliver (hopefully) on time and on budget one would hope this confidence would return and with it more orders. I will hold the rump a little longer in case things turn either way but this is a position on the way out.
I wish I had sold a couple of months ago at 160 – but then again I am an investor, not a psychic!
EDIT 01/12/2014 – Sold rest at 138 on 27th November – just before OPEC announcement and a 14%+ fall- sometimes you are good, othertimes lucky. I will sell my EDF tomorrow – again bearish on energy…