I am closing the last of
Fluor (FLR), one of my favorite companies period, today. This stock has dropped 50% in just over a quarter on the "global slowdown" trade. Since I don't see the global economy recovering anytime soon, and it does not seem to matter how many times these global engineering companies reiterate business is fine and announce contract after contract, they get sold off. [
Aug 12: Fluor to Hedge Fund Computers: The World Does not End at $110 Oil. Or $80. Or $50] It goes back to the main complaint I've had for months - fundamentals simply don't matter anymore and I simply cannot invest rationally in a market where facts mean nothing. While many of its customers are rich foreign governments (who have surpluses) and oil rich
entities overseas, some portion of their customers still rely on the credit market which I suppose is the main risk I see here. But just about every risk known to man is now being priced into these stocks. Unbelievably the stock traded as low as $46 yesterday, so with the stock back up to $52 I am going to exit. I see upside to $60 but then the chart says it is a short again so it's not worth those $8 in this market. As I've said before this whole global/commodity trade might as well be one stock - they are all treated the same regardless of independent fundamentals. Until that changes I find this sector
uninvestable. All you can do is trade these stocks, and there is no need to own 15 when really 1-2 will do. Frankly it is quite disheartening to watch a natural gas stock treated no different from a global engineering stock. Or that no amount of good news can push a stock up [
Aug 11: Global Infrastructure Night in Earnings] [
May 16: Fluor as a Wind Play? $1.8 Billion Says Yes] [
Jul 9: Fluor vs Perini - a Rising Tide does not lift all Boats] [
Feb 28: Fluor with Great Report and Boosts Guidance]
I am closing the
0.8% position in
Fluor just north of $52. I have owned this one twice, and restarted the position in
February 2008 in the (split adjusted) $77s. Thankfully we sold quite a bit in the (split adjusted) $80s and $90s, so we still left with a
profit of $800.
Fluor is a company that is a central figure in the modernization of the Asian world, along with thirst for energy in the Western world. I plan to own it again once the market begins to recognize the world will not end, and not every country is in as bad of shape as the U.S. Not that valuation matters but the company now trades at under 15x 2008 estimates for the best of breed operator in this space.
No position
