Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Crude oil is breaking below the all important 200-day moving average and, with abysmal RS, we are forced to cut ties with the Sector; moving to underweight from market weight. Weakness can be seen across the board, from the E&amp;P companies to the service companies. Perhaps the biggest beneficiaries of declining oil prices will be the Consumer and the Emerging Markets. We would also be cautious of financials with large exposures to energy companies.

Crude oil is breaking below the all important 200-day moving average and, with abysmal RS, we are forced to cut ties with the Sector; moving to underweight from market weight. Weakness can be seen across the board, from the E&amp;P companies to the service companies. Perhaps the biggest beneficiaries of declining oil prices will be the Consumer and the Emerging Markets. We would also be cautious of financials with large exposures to energy companies.

US/Europe Event-Driven Analyst

John DeMasi

Event-Driven

<a href="https://www.smartkarma.com/entities/11091" target="_blank" data-smartkarma-citation="entities:11091:1">Chevron Corp (CVX US)</a> and <a href="https://www.smartkarma.com/entities/5048" target="_blank" data-smartkarma-citation="entities:5048:1">Anadarko Petroleum (APC US)</a>  <a href="https://chevroncorp.gcs-web.com/static-files/49922d8c-51e9-4c21-9c5e-d4c9af41901b" target="_blank">announced</a> a definitive agreement on April 12, 2019 whereby CVX will acquire APC for $33 billion in a stock and cash deal with a headline value of $65 per share and an APC total enterprise valuation of $50 billion (including APC’s $2+ billion of minority interests on the balance sheet). This represents a nearly 39% premium to APC’s closing price on April 11th of $46.80, and a 47% premium to APC’s 30 trading day average close through April 11th.
Merger consideration consists of 0.3869 shares of CVX and $16.25 in cash. CVX will issue 200 million shares and pay $8 billion in cash, in addition to assuming APC’s $15 billion of net debt. The companies anticipate annual synergies of about $2 billion (“run-rate cost synergies of $1 billion before tax, plus capital spending reductions of $1 billion within a year of closing”) and expect the deal to be accretive to free cash flow and earnings one year after completion.
Below I dive into the details from the perspective of a merger arbitrageur evaluating the deal as a potential portfolio position.

Chevron Corp (CVX US) and Anadarko Petroleum (APC US)  announced a definitive agreement on April 12, 2019 whereby CVX will acquire APC for $33 billion in a stock and cash deal with a headline value of $65 per share and an APC total enterprise valuation of $50 billion (including APC’s $2+ billion of minority interests on the balance sheet). This represents a nearly 39% premium to APC’s closing price on April 11th of $46.80, and a 47% premium to APC’s 30 trading day average close through April 11th.
Merger consideration consists of 0.3869 shares of CVX and $16.25 in cash. CVX will issue 200 million shares and pay $8 billion in cash, in addition to assuming APC’s $15 billion of net debt. The companies anticipate annual synergies of about $2 billion (“run-rate cost synergies of $1 billion before tax, plus capital spending reductions of $1 billion within a year of closing”) and expect the deal to be accretive to free cash flow and earnings one year after completion.
Below I dive into the details from the perspective of a merger arbitrageur evaluating the deal as a potential portfolio position.

Chevron Acquisition of Anadarko Petroleum – E&P Tempers Flare

United States

SPDR S&P Oil & Gas Exploration & Production ETF is an exchange-traded fund incorporated in the USA. The Fund's objective is to replicate as closely as possible the S&P Oil & Gas Exploration & Production Select Industry Index, an equal-weighted index.

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SPDR S&P Oil & Gas Exploration (XOP US)

Energy Breaking Down - Underweight

Crude oil is breaking below the all important 200-day moving average and, with abysmal RS, we are forced to cut ties with the Sector; moving to...

Vermilion Research

Chevron Acquisition of Anadarko Petroleum – E&P Tempers Flare

Chevron Corp (CVX US) and Anadarko Petroleum (APC US) announced a definitive agreement on April 12, 2019 whereby CVX will acquire APC for $33...

John DeMasi

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