Category Archives: HP

Performance Review: Helmerich and Payne

On January 15, 2017, we reviewed Helmerich and Payne (HP) after it achieved our July 2, 2016 upside target of $79.16.  At the time, we reflected on the following thoughts:

“The only question now is the selling of the stock.”

For all intents and purposes, HP should have been considered for selling the principal or the entire position.  Since the January 15, 2017 posting the stock has had the following price action:

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Our fear then was, “Can we handle see[ing] the stock fall back to where we bought it?”  This thought only comes to mind when or if the stock price substantially exceeds the norm for an individual investment.  At the time, HP had annualized gains of more than +60%.

For now, it is back to the drawing board for HP.  We’ll have to re-examine the attributes for the stock to determine if investment is warranted or not.

Cimarex (XEC) at a New Low

Today, Cimarex (XEC) hit a new 1 and 2-year low as the energy sector continues to fall apart.  We like Cimarex (XEC) because it is a spin-off from Helmerich & Payne (HP) which has had a tremendous dividend increasing history.  Additionally, we have been very fortunate in being able to call most of the peaks and troughs in the price of Helmerich & Payne found at the links below:

Cimarex appears to be willing to continue the conservative management style that got Helmerich & Payne through hard times in the oil drilling industry during the 1980’s and 1990’s.  Therefore, we believe that Cimarex should be on your watch list as well.

Below is the Altimeter for Cimarex since being spun off from Helmerich & Payne:

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note: dividend data prior to 2006 is hypothetical based on $0.04 quarterly payment

We believe that whenever the Altimeter is trading at or above 1032 the stock should be sold.  Additionally, whenever Cimarex’s Altimeter is trading at 600 or below, the stock should be considered for acquisition.  Below is the performance of buy and sell indications based on the Altimeter levels just mentioned:

Date Price Altimeter buy/sell % change
6/26/2003 23.96 599 buy 72.29%
3/3/2005 41.28 1032 sell -47.25%
10/10/2008 32.66 544 buy 90.02%
3/11/2010 62.06 1034 sell -42.18%
8/22/2011 59.81 598 buy ??????????

Our expectation is that Cimarex may decline as low as, and possibly lower, than the 2009 level on the Altimeter.  That would equal a price of $31.80, or -30% from the current price.  A purchase of the stock at this time may be warranted, based on the Altimeter.  However, be prepared to buy more at lower prices.