Deep Water Drilling Stock Surging on Bankruptcy Plans
Daily Stock Market Update:
Markets are posting modest gains so far today (though losing steam at the time of this writing), finally providing some day-to-day consistency that the markets have been lacking for weeks. Strong earnings are giving a bump to this rally, with Morgan Stanley leading the way up during today’s trading.
Today’s Top Performer is a great example of how good news analytics can find profits where few traders would think to look.
Today is the second time we’ve found nice profits trading this particular stock in recent months. And, despite its recent struggles, we’ve actually been taking advantage of the long side. You can learn how the NewsQuantified platform helps find profitable plays in any market environment in one of our free weekly training seminars. They’re totally free and feature foundational tips for news-based stock trading (and a virtual tour of our platform). There’s some space left in the next session:
Today’s Top Performer: Seadrill (NYSE:SDRL)
Sea-Drill, based in London, is a deep-water oil drilling contractor. They use a fleet of specialized vehicles to assist oil firms in deep-water drilling operations. SDRL has been serially struggling in recent years, falling from highs near $15/share in 2015 to well below $.30 today.
Despite these struggles, NewsQuantified users have found substantial profits from SDRL in recent months—and not from short selling. In fact, we featured Seadrill in our Top Performer blog back in September. Back then, we found some nice gains on investor enthusiasm for SDRL’s reported plans for bankruptcy.
Yesterday afternoon, after trading closed, those same plans were approved by a US Court. And we’re profiting all over again. Under the terms of the plan, SDRL will receive a substantial debt write down. Debt-holders will receive an equivalent equity share in a restructured Seadrill. Meanwhile, Seadrill will raise $1 billion in new investments to help recapitalize the company.
From the beginning of the bankruptcy process, investors have seemed to view SDRL as a company with valuable operations that was simply being hemmed in by poor financial planning. That’s precisely the sort of situation bankruptcy law is designed to remedy, and investors appear to believe that a profitable operation can be recovered from SDRL’s financial struggles.
That sentiment is driving a buying spree on this announcement. The stock is sitting up 83%, and still surging, at the time of this writing.
Often, our blog focuses Top Performers from headline-grabbing news like breakthrough tech or major acquisitions. But today stands as a great reminder that news-based trading approaches find profits just about everywhere. Even in more mundane news like court approval of bankruptcy plans.