It is not news that the oil and gas industry has been facing challenges for the last few years. During this period, oil players have drastically cut down their capital spending, which has negatively impacted equipment makers such as National-Oilwell Varco, Inc (NYSE NOV). Many industry experts are predicting a turnaround during the 2019 – 2020 period and have recently mentioned that the industry might be hitting bottom and soon will begin to turnaround. Marc Edwards, CEO of Diamond offshore, has also been consistently mentioning that turnaround might be around 2019.
The oil industry is a very capital-intensive business. For the last few years, oil players have cut down capital spending drastically. But as the industry recovers, companies will start increasing their capital spending. In that case, why are we selling now? The answer to that question is the trade war. Trade wars are never good for the economy. We are concerned that the current trade tariffs might slow down global economic growth and might delay the oil recovery.
Recently, NOV insiders, including the CEO, are selling the stock. Insiders sell stocks for a variety of reasons, including personal finance. However, in general, CEOs don’t sell shares when the stock is undervalued.
So we decided to exit the trade.
To read reasons behind this buy click here
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