Thursday, October 23, 2008

A flat reaction to good earnings

The current and forward P/E ratios of the oil drillers are sinking ever lower, as they turn in successive quarters of solid results. Today we got results from Ensco (calls 1.0% of portfolio), and the stock moved modestly to the upside. The forward P/E is now 4, which is extremely low provided dayrates hold up. My calls will likely expire worthless in January, so I'll have to rebuild a position over time.

In other news, Finisar (common 8.8% of portfolio, calls 2.2%) announced that they are expanding in China. So despite the languishing stock price, their business plans continue. At some point their efforts will be recognized, but probably not until the negative environment for equities dissipates.