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Halftime Pt. 2 — Whitney Tilson: BP Will Earn Its Way Out of Trouble

Despite all of the headwinds, Whitney Tilson of T2 Partners says the best way to play the BPoil spill is long.

The London-based company will "earn its way out of trouble," says Tilson on Wednesday's Fast Money Halftime Report, even though the cost of the spill remains to be seen. He notes that BP is the fourth most profitable company in the world, adding that it consistently earns more than $20 billion in profits a year. He thinks the spill will cost the BP up to $30 billion, so even if it takes a year or two, the company is able to pay it off and continue to make money.

Earlier this month, Tilson went on Fast Money to reveal that BP was his latest long position. At the time, he announced a 4% position in the company and currently holds the same amount.

It's important to take a small position on BP, he says, because it's possible that the spill will cost the company up to $150 billion and its stock will have no value. But with his $30 billion estimate, the great bottom fishing opportunity.

What's the Trade?

I'm long puts BP because I think the oil spill will cost closer to $100 billion, says Brian Kelly of Kanundrum Capital.

Short Homebuilders? Consider Covering, Tilson Says

If you're playing homebuilders from the short side it may be time to think about covering, Tilson tells Fast Money.

"Some of the major homebuilder are now trading at (only) a slight premium to book value," Tilson explains, "and generally I’m only interested in shorting a sector with terrible fundamentals, when they’re trading at 1.5 times book or higher."

"With the decline over the last month, major homebuilders are now trading around 1.1 times book and it’s time to start covering," Tilson says. "I haven’t pulled the trigger yet because I think there’s another shoe to drop but I plan to start trimming my shorts."

)Considering Tilson profitted handsomely from shorting the housing sector, we thought you'd find his new outlook kinda' noteworthy!)

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Trader disclosure: On June 23, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Kelly owns (BP) puts; Kelly owns (FCX) puts; Kelly owns (GLD); Kelly owns (GDXJ); Kelly is short (GS); Grasso owns (ASTM), (ABK), (BAC), (BGP), (C), (DYN), (JPM), (LPX), (NDAQ), (PRST)

For Brian Kelly
Accounts managed by Kanundrum Capital own (AUY)
Accounts managed by Kanundrum Capital own (GFI)
Accounts managed by Kanundrum Capital is short (AMZN)
Accounts managed by Kanundrum Capital is short (RCL)
Accounts managed by Kanundrum Capital is short (XLY)
Accounts managed by Kanundrum Capital is short (AFL)
Accounts managed by Kanundrum Capital is short (CME)
Accounts managed by Kanundrum Capital is short (EWI)
Accounts managed by Kanundrum Capital is short (EWO)
Accounts managed by Kanundrum Capital is short (GS)
Accounts managed by Kanundrum Capital is short (HIG)
Accounts managed by Kanundrum Capital is short (XLF)
Accounts managed by Kanundrum Capital is short (XLI)
Accounts managed by Kanundrum Capital is short (FCX)
Accounts managed by Kanundrum Capital is short (XLB)
Accounts managed by Kanundrum Capital is short (XLK)
Accounts managed by Kanundrum Capital is short (CLF)
Accounts managed by Kanundrum Capital is short (JOYG)

For Steve Grasso
Stuart Frankel & Co and it’s partners own (BAX)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (DHR)
Stuart Frankel & Co and it’s partners own (DYN)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MERC)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)
Stuart Frankel & Co and it’s partners own (SYMC)
Stuart Frankel & Co and it’s partners own (TLM)
Stuart Frankel & Co and it’s partners own (TRV)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners own (TBT)
Stuart Frankel & Co and it’s partners are short (QQQQ)
Stuart Frankel & Co and it’s partners are short (AAPL)

For Whitney Tilson
Funds managed by Whitney Tilson own (BP)

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