[ORIG] - bottom very likely in

I think Ocean Rig shares have put in a major bottom today, perhaps the bottom.  In the backlink I originally modeled the bottom to be at $1.50 but then the shares did something unusual changed my very near term view north a bit.

Today during regular trading they plummeted to just under $1.50.  I was stopped out near the open but then got back in at $1.49 after seeing this enter the throw under condition on the day of earnings.  I assumed per comments exchanged with Anonymous in that post that earnings would be good.  It regained all of its daytime losses during the extended trade because the earnings were actually quite spectacular. 

Even with oil prices in the dirt ORIG is making nice profits.  Not only did it beat revenue estimates by $3mm (a small amount but hitting revs is a key metric right now) but it also beat earnings estimates by 16 cents per share.  Might not sound like much by for a good portion of the day we were talking about a company trading at a buck fifty.

Importantly, these guys are playing deflation for all its worth.  They not only successfully pushed out acceptance of a new ship until 2017 without having to incur charges for doing so (thus lowering their cash burn rate and thus BK risk substantially until then), but they used the money they did not spend on that ship to buy back debt which had been devalued due to panicking investors running away from it.  That is just fantastic.  Ocean Rig has been thrown out with the bathwater but now it should become obvious to the 20% sold short shares that BK is not going to happen.

 

Current model is below (includes extended trade).  Don't discount the potential that this could actually back test that lower rail from above before really deciding to break out.  An inclining double bottom made from twin unicorn tails like that would be very, very bullish.  But even if we only get the one unicorn tail I am bullish on these shares.

BTW congrats to anonymous for loading up at $1.50.  That was some primo market timing.  This was my plan as well until I saw something unusual in the matrix.  But I did well enough even getting stopped out in the AM.