The news today that BP is
due to set aside $20 billion in compensation payments in a managed fund will come as welcome relief to investors, no doubt.
While it can hardly be good news for any company, even one as oil-rich, literally, as BP, at least it will help put an end to some degree of uncertainty.
Indeed, the main problem with the BP situation at present is the lack of action and information. It appears the $50 million spent on PR by the company is small fry compared with the corporate communications the company should have been focused on, but little has come out by way of media reports.
Will BP provide a dividend in 2010 or not? They had a meeting on Monday, and the result of that was? Why do they still have BP's Anthony Hayward talking to angry American media when it is obvious a skilled American PR is required?
Interestingly enough, Neil Collins at the Telegraph suggests
BP now needs someone like Tony Blair, certainly as an ideal. While some commentators regard the matter as satirical, what is underlined is that BP needs to be seen to act now to repair the damage among investor perceptions.
Certainly if Tony Blair can mislead the UK into voting for an oil war, surely it should not be too difficult for Tony Blair to mislead US votes into believing the situation in the Gulf of Mexico is controlled and managed, and that everything is now absolutely fine?
No big moves in BP's oil price after the announcement of the $20 billion fund agreed with Washington, as markets appear to have already priced this in. Almost certainly there will be no dividend, and almost certainly markets have also priced this in.
I would be tempted to look to
buy BP shares now on the grounds that they have suffered a crisis but are unlikely to suffer further, and that under normal market conditions we should expect the share price to rise back into the 400's or 500's within a year. For a shares ISA that would easily outpace the meagre savings rates available at present.
However, I do not think market conditions are normal, and fully believe we are
now in a bull market that will likely lead the FTSE 100 back under 4000 points over the next 12-18 months. That will almost certainly take BP shares down with it.
So if you fancy a punt, then BP shares are ripe for it, but take care that the overall market movement appears to be downwards at present.
Post a Comment