Southwestern Energy Case Study
Q3 - OverallImpression
Based on your overall impression of Southwestern Energy and using a six-point scale where 6=a very positive impression and 1=a very negative impression, please tell me how you would rate the company.
"Uncertain. They’re a great company. The CEO is a moron when it comes to explaining it."
Q4 - OE_Strengths
What do you see as Southwestern Energy’s particular strengths as an investment?
"It's the rate of change in capital intensity in 2019."
Q5 - OE_Weaknesses
What do you see as Southwestern Energy’s particular weaknesses as an investment?
"CEO messaging is horrible. They need to explain why they are more than just a commodity proxy, and the only way they can do it is by explaining their cash flow profile beyond '18. …show more content…
Yet, the company will not explain what the upside is to 2019. Until then, it acts like nothing more than a levered commodity proxy. They won't go out with a message to investors. I can figure it out myself because I can model the company, but most investors today are not going to take the time to do that on a company like Southwestern. It's not worth their time. Southwestern is asking investors to do too much work instead of explaining it to them. Investors need to be spoon fed, and they do a horrendous job. By the way, IR does a good job.IR does a really good job. The bottleneck here is on the management side. You just had the CFO leave. Why on earth would a CFO leave when his stock's at $5? If he has options here, he just shot himself in the foot. When I call IR, he's going to be responsive to whatever I ask him about. I'm going to be like, 'How do I think about numbers like this?' But when the CEO markets, it's his job to decide what goes into his marketing plan. IR doesn't tell them how to explain the strategy. I told IR what they should do, and they're like, 'Yeah, I'll pass it along to the management.' They clearly don't care. The problem here is on the management communication. It's not because of IR. IR probably kills themselves. He probably does a thankless job, but he gets yelled at by his boss if the stock doesn't go up because as CEO he'll never take the blame. That's …show more content…
"Uncertain. Slightly above guidance. They're supposed to be pretty flat. Can we just write, 'slightly above guidance?'"
Q13 - OE_ClosestInvestmentPeers
Not limiting your thoughts to just industry peers, which companies would you consider to be Southwestern Energy’s closest investment peers?
"Chesapeake, Range Resources, Rice, Gulfport, Antero and Cabot."
Q14
Excluding commodity prices, how confident you are that Southwestern Energy can deliver differentiating value over the next 24 months versus peers? Please use a six-point scale where 6=very confident and 1=not at all confident.
"3 [6-pt scale]. Because management communicates badly, 3."
Q15
Outside of commodity prices, what would have to happen for Southwestern Energy to deliver differentiating value over the next 24 months versus peers?
"CEO has to talk beyond 2018. It's not IR."
Q17 - OE_IssuesWeighingOnValuation
What, if any, company specific issues are weighing on valuation?
"CEO communicating beyond
Based on your overall impression of Southwestern Energy and using a six-point scale where 6=a very positive impression and 1=a very negative impression, please tell me how you would rate the company.
"Uncertain. They’re a great company. The CEO is a moron when it comes to explaining it."
Q4 - OE_Strengths
What do you see as Southwestern Energy’s particular strengths as an investment?
"It's the rate of change in capital intensity in 2019."
Q5 - OE_Weaknesses
What do you see as Southwestern Energy’s particular weaknesses as an investment?
"CEO messaging is horrible. They need to explain why they are more than just a commodity proxy, and the only way they can do it is by explaining their cash flow profile beyond '18. …show more content…
Yet, the company will not explain what the upside is to 2019. Until then, it acts like nothing more than a levered commodity proxy. They won't go out with a message to investors. I can figure it out myself because I can model the company, but most investors today are not going to take the time to do that on a company like Southwestern. It's not worth their time. Southwestern is asking investors to do too much work instead of explaining it to them. Investors need to be spoon fed, and they do a horrendous job. By the way, IR does a good job.IR does a really good job. The bottleneck here is on the management side. You just had the CFO leave. Why on earth would a CFO leave when his stock's at $5? If he has options here, he just shot himself in the foot. When I call IR, he's going to be responsive to whatever I ask him about. I'm going to be like, 'How do I think about numbers like this?' But when the CEO markets, it's his job to decide what goes into his marketing plan. IR doesn't tell them how to explain the strategy. I told IR what they should do, and they're like, 'Yeah, I'll pass it along to the management.' They clearly don't care. The problem here is on the management communication. It's not because of IR. IR probably kills themselves. He probably does a thankless job, but he gets yelled at by his boss if the stock doesn't go up because as CEO he'll never take the blame. That's …show more content…
"Uncertain. Slightly above guidance. They're supposed to be pretty flat. Can we just write, 'slightly above guidance?'"
Q13 - OE_ClosestInvestmentPeers
Not limiting your thoughts to just industry peers, which companies would you consider to be Southwestern Energy’s closest investment peers?
"Chesapeake, Range Resources, Rice, Gulfport, Antero and Cabot."
Q14
Excluding commodity prices, how confident you are that Southwestern Energy can deliver differentiating value over the next 24 months versus peers? Please use a six-point scale where 6=very confident and 1=not at all confident.
"3 [6-pt scale]. Because management communicates badly, 3."
Q15
Outside of commodity prices, what would have to happen for Southwestern Energy to deliver differentiating value over the next 24 months versus peers?
"CEO has to talk beyond 2018. It's not IR."
Q17 - OE_IssuesWeighingOnValuation
What, if any, company specific issues are weighing on valuation?
"CEO communicating beyond