David Barse of Third Avenue Management Discusses BP plc and Lehman
Regarding British Petroleum, David Barse said that BP is well run but not something that should be invested in right now. There is no sense of certainty on how things will play out due to the disaster in the gulf. There is no chance that Third Avenue will invest in BP in the near future. The thing is, a lot of oil companies have fallen and this creates opportunity. The moratorium on off shore drilling is of benefit to on shore companies. And those are the opportunities to focus on. EnCana Corporation and Cenovus Energy are two Third Avenue Management holdings to consider and are discussed at the end of this article.
When asked what he likes right now, Barse responded by saying that Third Avenue Management likes to “Buy what is safe and cheap. It's really that simple. But we need a strong balance sheet. Good management. A business we understand. And we need it to be trading at an inexpensive price. That is a discount to what we think is intrinsic value.”
Today, Barse sees is looking into Lehman Brothers for distressed debt opportunities. There are a lot of similar bonds trading at 20 cents on the dollar. This is where the opportunity may lie with Lehman. Barse gets into more detail in the video below.
Third Avenue Management LLC is invested in the following oil related companies:
Cenovus Energy is an integrated oil company headquartered in Calgary, Alberta. Cenovus Energy Inc has a market cap of $20.37 billion; its shares were traded at around $27.1 with a P/E ratio of 28.8 and P/S ratio of 2. The dividend yield of Cenovus Energy Inc stocks is 2.8%.
Cenovus Energy Inc is owned by 9 Gurus. Third Avenue Management owns 3,156,426 shares as of 03/31/2010, an increase of 10.28% from the previous quarter. This position accounts for 1.54% of the $5.36 billion portfolio of Third Avenue Management. For a complete list of gurus holding CVE, go here.
EnCana Corporation is one of the world's largest independent natural gas producers and gas storage operators. Encana Corp. has a market cap of $23.54 billion; its shares were traded at around $32.02 with a P/E ratio of 9.7 and P/S ratio of 2.1. The dividend yield of Encana Corp. stocks is 2.5%. Encana Corp. had an annual average earning growth of 20.7% over the past 10 years.
EnCana Corp. is owned by 11 Gurus. Third Avenue Management owns 3,988,416 shares as of 03/31/2010, an increase of 11.88% from the previous quarter. This position accounts for 2.31% of the $5.36 billion portfolio of Third Avenue Management. For a complete list of gurus holding ECA, go here.