I'm just gonna come right out and say today's "Call-To-Action": BPmust cut its dividend. Now. Right away. And if you caught "The Strategy Session" yesterday, you already know why.
JP Morgan Chase Vice Chairman Jimmy Lee couldn't have said it any better: "What is the risk management profile of the firm?" Lee asked. "Are you building a one hundred-year storm into your business plan? Because if you're not, when it hits, you'll have a problem."
BP is in the midst of a hundred-year storm, and from the outside in, it doesn't appear they have any sort of plan.
The company is shelling out billions in dividend payments to shareholders. Meanwhile, no one knows the true cost of the cleanup.
Still, the stock is drawing massive attention from so-called value managers, who remain captivated by the stock's huge dividend. Boy are they in for a shock. There may be reasons to own BP. But right now, income isn't one of them.
Mr. Lee had it right. In uncertain times, you need to preserve capital, and right now, that's exactly what BP is not doing.
So I want to personally thank Jimmy Lee for yesterday's appearanceon "The Strategy Session," and for inspiring today's K-Call on BP. He may have just saved us all from a nasty spill.
Gary Kaminsky does not hold any equity positions.
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