$30 Oil here we come..., page-129

I cashed out today at $34.40. Probably a bit early but there are quite a few things in the market that make me rather nervous. I also found myself doing a couple of calculations and estimates on stuff I have never really bothered with for WPL as I always assumed blue chip value was always there. I was surprised to find WPL's NAV is only about $20 based on market assets less liabilities / shares outstanding as of June 2014 (less Apache). In theory, if there were a major downturn WPL could breach far lower than $32, $30 or the absolute low of $26-27 set back in 2009. I normally try to buy something at 50% less the NAV for spec stocks but in a depression stocks could fall much further and I price risk similarly. Risk free value would be thus $10-$20, however extreme or unlikely it gets there, but it's important to note that credit and debt markets are far worse than in 2009.

The second measure was PE, which has jumped from 9 or 10 back up to 16 if you assume earnings per share of $2.13 in 2015 compared to $3.74 in 2014. On the bright side I disagree with JP Morgan's estimate of the dividend being cut to 60 US cents a share or 77c AUD. I agree with Morningstar's estimate that the dividend could be cut to $1.70 from $2.78. Quality assets and companies have always deserved a premium, still it's nice to know where the bottom really could be if all hell breaks loose like 2009.