April 19, 2006
'Playing Favorites'
HAL (HALLIBURTON CO)
Everybody remembers my Monday
night thing on 'Jay Leno' right? When he asked me what my favorite stock
is?...
I've been behind this stock ever since the show started, when it was in the
40's... Hal may be my favorite stock, but it's not Wall Street's...
You see, HAL - it's really two companies. There’s the energy services
group - that's the oil service business. Then there's that part that you
read about, pretty negatively every day in the paper.
I'm talking about KBR - Kellogg, Brown and Root. The engineering and
construction business.
To put it pretty simply, Wall Street loves pure plays. Especially in the
oil patch right now.
Pure plays get a premium, because the guys on Wall Street know exactly what
they're getting and exactly what they're worth.
I've been arguing that HAL should spin off KBR for as long as I have had this
show.
When KBR gets spun off, HAL will be two separate businesses in the only way
that matters. The market will be able to value each business separately,
and I think both of them will be better off for it.
Hal plans to sell just under 20% of its stake in KBR.
There's only one thing I care about: trying to make you money! And
that means I’ve got to recommend HAL wholeheartedly.
Once they spin off KBR, you can bet against it because of the headlines, but I
believe if you short KBR - if you play the bear side - you will get crushed!
I think Wall Street is estimating HAL’s worth too conservatively. To be
honest, you know I’ve got to tell you, I think this stock's heading to $100.
I feel so strongly about this that I think you should just go buy this
stock. You know I always tell you to do the homework? This one I’m
telling you - I’ve done the homework.
The bottom line: Pull the trigger right now on the house that Cheney
built: the money machine, if not the money train, that is HAL!