My Second Crush of 2012
Kyle is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In a previous trading life, when I was a truly newbie investor, I made my first petroleum trade in Marathon Oil Corporation (NYSE: MRO). That trade turned out to be a nice one at the time (shortly after 9/11), and over the course of time I had to close my long position. Down payments on homes are a funny thing. Considering my sentiment then, I felt as though the company had run nicely for me, and once certain necessities were tucked away, I moved on to other equities.
When I heard the news that Marathon Oil planned to spilt the company, I honestly didn’t think anything of it. In June of 2011, Marathon Petroleum Company (NYSE: MPC) began trading. Both of these companies offer a delicious dividend and look to benefit from the split as the businesses will focus on refining (MPC) and exploration and production (MRO).
Shortly after the Marathon split was effective, I heard the news that ConocoPhillips (NYSE: COP) intended to execute a similar split, which would create the largest independent refiner in the world. After doing some homework (which I always advise), and letting the initial reaction settle (COP jumped almost 5% after the news), I started a position, and I have been adding to it at I prices I don’t mind paying.
The split will take place at some point in 2012. At its current price, ConocoPhillips offers a nice dividend yield of 3.7%. I started my long position in August and have added to it when I see “panic” moves put certain stocks on the clearance rack. Who can forget the September no trader wants to remember?
When the split occurs, shareholders will receive 1 share of the new company for every 2 shares of COP owned.
As I always state, I am not telling anybody to run out and start getting long positions in any stock I mention. I am merely telling you what is going on in a small corner of my market mind that is suitable for print. Both MRO and MPC offer their shareholders dividends (2% and 3%, respectively), and I expect the two companies from the COP split to afford their shareholders something in the same ballpark. For those who cruise these mentions looking for a quick score, you would do just as well eating two bowls of spicy chili before competing in a Triathlon.
It is my humble opinion, for the relatively new investor thinking about making a move into individual stocks, this is something for consideration, provided you do your homework and do well on your tests. I’ll have my red pen ready for any misspellings and grammatical errors.
Until next time, from the trading table,
Motley Fool blogger Kyle Metivier holds a long position in COP, and expects to add to it on any dips. He does not own any other stock mentioned, but does thank Marathon Oil for the lovely ride, we can still be friends.