Tsk Tsk, Transocean

Todd Shriber
 
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With the holiday season upon us, the Peanuts Christmas special will soon be aired on a network or two and with that, viewers will be treated to another round of the famous quote ''Good grief, Charlie Brown.'' Seven months removed from the Gulf of Mexico oil spill, one might say ''good grief'' with regards to the fact this event still draws plenty of headlines.

A more specific ''good grief'' candidate might just be Transocean, the owner of the Deepwater Horizon rig. A big part of the problem that the companies with exposure to the Gulf spill have faced, at least from an investor's perspective, is the involvement of the U.S. government. As the hedge funds that were raided earlier this week prove, it is quite unwise to get on the wrong side of Uncle Sam.

Yet that is exactly what Transocean is doing and it is enough to make an investor who wants to be long the stock say ''good grief.'' Remember this was a stock that traded above $90 before the Gulf spill and then flirted with $40 soon after. In other words, why not just make life easy and do what the Justice Department wants?

That would be the same Justice Department that had to ask a federal judge in New Orleans to force Transocean (RIG), the world's largest provider of offshore drilling service, to turnover rig safety documents.

Adding to the intrigue is the fact that the Justice Department had previously subpoenaed the documents from Transocean. Ignoring requests from the Justice Department is a lot like ignoring our parents when they asked us to clean our rooms when we younger: Failure to acknowledge the request does not mean it is going away. Problem is the Justice Department is a lot less friendly than mom and dad.

Why Transocean chooses to dance this dance with DOJ is anyone's guess and to put things simply, the longer the company ignores these requests for documents, the more suspicious the government gets.

The last three price targets issued by sell-side analysts on Transocean are $77, $80 and $99 and all were issued this month. So why not comply with DOJ and get back to the business of making money for shareholders? That is unless Transocean has something to hide.

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