PD

PD , Precission Drilling and TDG, Trinidad Drilling Ltd.

Hamilton

Last time in April a target of $18 was indicated, here are the then and now charts;

pd march 2011 PD july 2011

Since the last chart we spent a lot of time doing nothing much, perhaps a megaphone wave 4 of c, and then we shoot up on good earnings (not as bad as they were) and the world is rosy again. We still need a minor wave 4 of 5 and then 5 of 5 to finish this A-B-C structure. The stock is trading at a meaningless P/E of 66 but I am not sure when that was measured.

To add a little confidence to this A-B-C outlook and it’s implications , I have added TDG, Trinidad Drilling as a comparison;

tdg

This chart is arithmetic whereas the ones are semi-log. Sometimes things just present themselves better one way or the other. In any event the A-B-C is as plain as daylight even if it could be argued exactly where one ends and the other starts. This one also still seems to require a small 4 and 5 of 5 of C to be complete. Both are , of course , a sell either now or a little higher.

PD Precision Drilling

Hamilton

 

pd.un feb2

This is Precision Drilling’s chart as of Feb 1 2009.  We argued that it was a buy then at around $5 given the nice 5 waves down and the buy low/ sell high principle. Below is today’s chart; for some reason I never looked at it in between.

pd march 2011

This is, by the way, a semi-log chart, sometimes they capture the essence better. This is an a – triangle b – c correction shown schematically. Notice theat time-wise is is very much overdue. Presently it is at the 4th wave of previous degree (my original target) but will probable push higher towards a 50 to 62 % retracement level. That is around $18.

PD again

Hamilton

PD June 3

Maybe it is in recovery mode. Some things do not seem to add up. First of all the liability of US companies operating in the States is limited to $75 mln. Sure that will be changed after the fact but at what political cost? Secondly, this company earned 6Bln in the last quarter, so far the costs of this disaster are in the order of 1 Bln. It is not clear that the company is with its back to the wall as, no doubt, this will take 20+ years to sort out. Anybody who tried to short Philip Morris after the tobacco costs were levied and the mainstream thought was that they would face extinction soon, will tell you that that was not a good idea.

   Interestingly there is a little history worth recounting as it was so Canadian. When the company did a fairly large public offering back in 1987 the likes of Wood Gundy and, to a slightly lesser extend, Dominion Securities, were so confident that the “bought deal” was the way to go after Gordon Capital pioneered the concept in 1982, that Wood Gundy was essentially bankrupt and DS was not far behind when then Prime Minister Margaret Thatcher refused to listen to pathetic pleas to pull the issue . The deal between WG and First of Chicago fell through and in pure desperation WG accepted the somewhat reluctant embraces of CIBC with a little help of Brascan. DS, of course caved in to the Royal after having just recently tried to solve their succession problems ,endemic to every partnership, by going public. For Canada this effectively ended the four pillar system whereby banking, trust services, insurance and underwriting were strictly compartmentalized , as under Glass-Steagal in the US.Today both these investment dealers arguable run their parent banks which definitely is food for thought.