Trade

Bought 10% position in SDRL @ $19.63.

This is just a deep value play, pure and simple. The forward dividend is $2.40, so the yield is 12%. Revenue per share is $17.11, and the operating margin is 40%+. Going forward, this will improve, as new contracts signed in Q1 2010 will have a margin of 64%! EBITDA per share is a whopping $8.44.

These numbers are unreal. You can't find a cash cow like this anywhere. I even expect the dividend to go up from here.

The Macondo oil spill has gotten people frightened, and rightly so. However, Seadrill has limited exposure, with only one rig in U.S. waters. Other rigs are spread across Norway, South America, Africa, and Asia. This geographic diversity is a strength for Seadrill. So to is their status as a Norweigian company. Norway has a reputation for stringent regulation. The youth of Seadrill's fleet is just one more thing in their favor.

At this point, I think I'm going to treat SDRL as an income play, not speculation. This means that I will start to rotate out of my other income play, 30-yr Treasuries and into SDRL at these prices.