Oddball

Yesterday (Tuesday) the market was down as were all of my stocks except for one.  Today the market was up as were all of my stocks except for one.  In both cases the oddball was Ensco (ESV) which seems a little strange.

Ensco owns and leases out offshore drilling rigs.  I bought some earlier this year because the stock (with a 6% yield and low PE) seemed cheap.  This isn't looking like a great pick as the stock has recently gotten quite a bit cheaper.  In hindsight I overlooked a couple of things.  First while a company like ExxonMobil may not suffer too badly post peak oil production as you would expect decreased volume to be offset by increasing prices it is hard to see a company like Ensco prospering post peak drilling as you would expect fewer leases and lower lease rates (as the surplus of rigs pushes prices  down).  Second a low PE doesn't mean much if it is based on inflated earnings.  The earnings a company like Ensco reports are highly dependent on how fast it is depreciating the expensive drilling rigs it is leasing out.  Ensco recently wrote down the value of some of its rigs which means it hadn't been depreciating them fast enough and therefore that its reported earnings have been too high (and hence its real PE was not actually as low as reported).