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Since last October, offshore drilling stocks have lost many billions in market value. Some stocks (Noble Corp. (NE), Seadrill (SDRL), Ensco Rowan (ESV)), declined by more than 70%. All of them are now trading at a fraction of their book value. At first glance, we have an attractive value investment proposition.
Let's take a second look.
Book value of offshore drillers is a very subjective value indicator. The price of rigs that they own fluctuates with the demand for them and market sentiment. Swings can be huge on both sides. They influence stock