In what's billed as "the first of a new fortnightly investment column", Heather Connon writes in the UK Guardian online that
While you may it find it galling to buy shares in BP when it is polluting thousands of miles of fragile coastline, if you are looking for a solid long-term investment
you should buy BP stock as an excellent growth investment. Apart from her immorality promoting people buy out plummeting shares from the BP stockholders who literally own their Deepwater Horizon catastrophe, her economics are blatantly wrong.
Connon knows that BP's rupture will cost it a fortune:
Oil giant BP has lost more than £20bn from its market value since one of its oil wells started spewing into the Gulf of Mexico. That may seem a bit excessive given that the cost so far of dealing with the spill is just £308m. But "so far" is the crucial phrase. President Obama has made it clear he expects BP to pick up the bill for everything from cleaning up the coast line to compensating fisherman for their loss of earnings – and it is safe to say the eventual costs will be many times the amount spent so far.
In British, "a bit excessive" means "extremely excessive". But what she balances against that market value (not even the actual losses to the company's business in damages payments) is thrashing of the money to be made and paid by BP that she claims is worth buying low, because it's profits will be high. She's wrong.
Though she shills for BP and the oil corps saying "With reserves in accessible places dwindling "big oil" has to carry out such risky projects to keep the oil flowing" as explanation for why BP's CEO is "about the long-term implications of the disaster". She even admits
Even assuming such frontier schemes are sanctioned in the future – and California has already withdrawn its support for drilling off its coast – the cost of adding the safety measures to prevent similar disasters from happening may mean they will no longer be economically viable.
Though she immediately agrees with Exxon after it's Valdez spill that a $220M response ship is "too expensive" (somehow, compared with $25B annual profits), she warns that "the industry is now likely to be forced to invest big sums in that kind of equipment", as if that's unfair.
But then she really goes off the deep end. Her core argument for buying BP shares now, while they're down, is
On the flip side, of course, the less oil that can be extracted from these difficult places, the higher the price should go of what is relatively easily available. Higher prices mean higher profits for big oil. If that happens – and the oil price has been falling rather than rising since the Mexico disaster – one of BP's big attractions for investors should be safe: its generous dividend. After the precipitate fall of the share price, the yield – the dividend as a percentage of the share price – is 7.5%, which is more than double that available on even the best-paying cash Isa.
As if BP's dividends aren't BP's revenues minus BP's costs, which huge damages payments will cripple. In Connon's world, BP keeps its profits even as its costs skyrocket, its revenue sources are cut off by places like California.
I hope Connon buys as many BP shares as she can borrow money to pay for - that won't take much pressure off BP's existing shareholders selling out to her, but it will drive her into the poorhouse. But she should never get a public audience again. The Guardian is reputedly one of the "socialist" UK's more liberal news orgs. But they've given this insane fool what they advertize will be a biweekly column. I hope that when June 1 comes around, her name will be forgotten, except as a joke to everyone but the suckers who put obvious morality and economics aside to rush for a sucker bet on BP.
At least most investors haven't been distracted by this insane cheerleading. BP stock dropped even more sharply after Connon's 5/18/10 gibberish. I hope Connon bought in well before then.