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National OilWell (NOV) got a Good Deal

Published on December 17, 2007

National OilWell (NOV) got a Good Deal

December 17, 2007

(for details pls visit www.OptionPundit.net)

I assessed GRP from two different valuation model perspective and had arrived at $72 as intrinsic value with certain growth assumptions. National Oilwell Varco (NOV) agreed to buy Grant PrideCo (GRP) for $7.5billions roughly valuing $58/share (though actual cost may vary depending upon NOV’s stock price). I still think NOV got GRP cheap. Nevertheless, this acquisition will provide solid footing for NOV in the drilling equipment sector which is booming and will place it 2nd only to Transocean (RIG) that purchased Global Santafe (GSF) earlier.

There is lot going on during this week. Both bulls and bears are fighting for their share and so far bears have been winning. This is traditionally one of the best times of the year for bulls, so let’s see if they can win this year. I doubt but I can be wrong.

Goldman Sachs (GS) is announcing earnings tomorrow before market opens. So fas GS has been able to save itself from Subprime curse and has never missed earning for the past two years, let’s see what they have to say tomorrow. If there is even slight bad news, expect it to be beaten. MS and BSC will soon follow the course. Nike (NKE) in another big name on the board to announce earnings. NKE hasn’t missed earnings for the past 5 quarters, hope they continue to beat.

For all the earning strategy players, RIMM is announcing it’s results on Dec 20 after market close. So here you go, cheap way to play huge move. I am expecting +10-15% move in either direction.

During this options expiration week, on economic front Housing Starts data will be released tomorrow, GDP on Thu followed by Personal income on Friday.

Bottomline – All the spices and ingredients are  in place for a roller coaster ride. Have fun.

Profitable trading, OP

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