Pimco star Bill Gross views BP as a value play in the wake of its crisis and has been buying the beleaguered oil company’s bonds.
He told Reuters that Pimco owns $100 million of BP bonds and also purchased six- to 12-month paper of Anadarko Petroleum. That company owns 25 percent of the Deepwater Horizon well that is gushing oil into the Gulf of Mexico.
The Pimco chief investment officer told CNBC he likes BP one-year bonds, which yield 10 percent.
“This is either a double-A company or a triple-C company depending upon the caps and the ultimate cost. … We think it's closer to double-A.”
So that gives the bonds significant value, Gross says. “We’ve started to buy some."
BP’s 5.25 percent notes due in 2013 recently traded at 93.5 cents on the dollar, down from a peak of 110.8 cents earlier this year, according to Trace data.
Meanwhile, legendary short seller James Chanos has been selling shares of some major oil producers, but not BP.
“We haven’t played BP in any way, shape or form — short or long,” he told Bloomberg.
“We have looked at BP, but, like a lot of others, we’re scratching our heads. I think there are too many unknowables still.”
He declined to name the companies he has shorted.
But Chanos says his bearish view pre-dates the April 20 explosion at BP’s Gulf of Mexico well and stems from the companies’ dwindling cash flows.
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