Let’s recap a bit –
There are several new subscribers that have come into the Energy Word in the last few weeks. This isn’t surprising, considering how well oil and gas stocks have been performing, and if you know me, you know I think this is only the beginning of a very long and very profitable run we’re going to have.
If you’re not one of the new folks, you also know that I normally structure these weekly letters in a two-part form – the first part is for both the subscribers and the ‘freebie’ folks – the idea is to update everyone in what I’m seeing in the energy markets and give them a sense of my enthusiasm for the space and why they should have it too.
The second half, normally delineated with a solid line, is the actionable stuff for the paying crowd. As you well know, it’s not enough to have a desire to invest in energy stocks; the rubber meets the road in when, how, and who you choose to put your money into.
So, my actionable advice in all this is reserved for the folks who have (wisely!) chosen to pay for it.
Well, there’s NOTHING in this week’s letter for the freeloaders – it’s just us. And there’s a reason for that this week.
We’ve had a terrific run in the last month or two. Many of our new subscribers don’t know how well we’ve done. And many of the old subscribers, if they’ve not been following closely along, don’t realize just the kind of alpha we’ve been generating and how we’re planning to continue to keep that good, profitable cash flow coming in the months to come. So this letter is going to bring everyone up to speed a bit.
Let’s talk ever so briefly about the macro environment: There’s a global supply shortage in fossil fuels going on – don’t kid yourself, it’ll come here to the US too in time; that’s how global energy works.
And no one’s coming to the rescue here: Both OPEC+ and US producers have been losing money steadily for 6 years – I don’t care how anyone begs or even begins to freeze in their homes this winter, nobody is going to miss the opportunity to recoup some of those enormous losses. Believe me; it’s not just Russia that’ll play hardball – it’s Exxon and Continental and Range Resources too.
And we want to concentrate on this: The portfolio should reflect those stocks that will have the strongest correlation to the price of oil and natural gas. That’s where we’ve been for the last 5 months, even while being conservative at times with cash and options strategies – in independent E+P’s and some majors, some nat gas companies, and associated plays (like FCEL) and LNG (Cheniere). THAT’S IT – no refiners, no services, and limited pipelines.
So, I’ve been advocating for Exxon-Mobil, recently for Conoco-Philips in majors – EOG Resources, Pioneer Resources and to a lesser degree Continental, in Range Resources and to a lesser degree Cabot and EQT, and FuelCell and Cheniere. I’ve personally got lots of other stuff, including some Canadian plays and KRBN (the carbon ETF) – but this is the main focus of the portfolio.
