Author Topic: Saudi Aramco IPO  (Read 814 times)

EscapeVelocity2020

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Saudi Aramco IPO
« on: November 21, 2019, 11:16:36 PM »
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The IPO is set to start on November 17 while the final offer price is set to be announced on December 5.

So, is anyone investing in the IPO or jumping on when trading starts in December?  Reminds me of the temptation of investing in cigarette manufacturers when I started investing in the 90's, you can make a steady, fat yield (and get to ER a little quicker), but there is a moral cost...

https://www.houstonchronicle.com/business/columnists/tomlinson/article/Investment-in-Aramco-is-an-investment-in-14835168.php
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Aramco produces 10 percent of the world’s oil supply, making it capable of controlling the global market. The Saudi oil minister is also the de facto leader of OPEC, a cartel that routinely sets oil production levels and therefore prices.

Since the Saudi government relies on Aramco to throw off tens of billions of dollars, the government is also certain to ensure the company is profitable and generating returns on shareholders’ investments.

ysette9

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Re: Saudi Aramco IPO
« Reply #1 on: November 22, 2019, 04:51:35 AM »
My father played the IPO game for a little while when I was a kid. He stopped when my mother added everything up and showed him he was losing money overall. That left a big impression on me.

bwall

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Re: Saudi Aramco IPO
« Reply #2 on: November 22, 2019, 05:32:05 AM »
I think that the IPO is only on the Saudi exchange. So, unless your broker can trade on the Saudi exchange (and most can't), then you won't be able to participate.

I believe the Armco IPO is a sucker's bet. The company itself needed three years to get it's books in order for the IPO. Presumably, the look-back period is only three years. It wasn't (and IMO still isn't) run as a company, it's run as a department of the Saudi government. So, if the Saudi government needs more money, for say, a war in Yemen, or to fund ultra conservative Wahabbi madrases (schools) in Muslim countries, then who will be getting the bill? Aramco and Aramco only.

Another point is the valuation; MBS wanted $2 trillion for prestige reasons, not based on facts. He's getting somewhere between $1.5 and 1.75 trillion. Not much upside there and the resulting yield will be lower than comparable oil stocks in the West.

Bottom line: A sub-optimal investment that props up a dirty regime that is promoting values antithetical to those we in the West hold dear.

talltexan

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Re: Saudi Aramco IPO
« Reply #3 on: November 22, 2019, 09:24:14 AM »
I have a small stake in $XLE

Has a decent dividend. Not sure why Aramco is better.

Buffaloski Boris

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Re: Saudi Aramco IPO
« Reply #4 on: November 22, 2019, 09:56:07 AM »
I’m a fan of contrarian investments at a low enough price. This one though? Hard pass.

I look at this as more like a sovereign debt offering. But without the explicit terms for payment on that debt. Possibly backed by an asset that in the long term is going to decrease in demand.

If I want to invest in oil, there are many low priced stocks available domestically.

Travis

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Re: Saudi Aramco IPO
« Reply #5 on: November 22, 2019, 06:20:34 PM »
I’m a fan of contrarian investments at a low enough price. This one though? Hard pass.

I look at this as more like a sovereign debt offering. But without the explicit terms for payment on that debt. Possibly backed by an asset that in the long term is going to decrease in demand.

If I want to invest in oil, there are many low priced stocks available domestically.

Morality issues notwithstanding, isn't this essentially a government-subsidized corporation trying to go legit? Doesn't bode well for early profitability. The Saudi oil industry has had a rough few years thanks to us increasing our production.  And a lot of stocks drop in price shortly after the IPO.