Well this group finally caught a bid today, and seems to be joining the oil service names I like so much. I tried overweighting this group in early September, but the breakout stalled.
So let's see if this is finally the real move - I am going to add to 3 current positions and start a new one and add to this deep sea oil driller basket. I am adding to current positions in: GlobalSantaFe, Pride International, and Diamond Offshore. I am also beginning a position in a 4th name, Atwood Oceanics (ATW) ; 250 shares or a 1.8% position in the fund. For more about Atwood Oceanics and the comparative valuation please see this post from mid September.
These 4 names now make up a 'sector' basket that is 6.5% of the fund.
This group has stumped me as it has not participated in either the oil service rally or the general market rally, but technically speaking the charts look in good shape and we could be at the beginning of a rally. If I see more follow through tomorrow I will add more as we might have the beginnings of a sector rotation. Or they could just be teasing me again. But with oil going to $100 the long term is very good for these names as they have customers flush with cash. Remember, these are not tied to the domestic market or natural gas market (see comments about Nabors (NBR) in this entry), so their pricing power is a lot more firm than land operators or those tied to the natural gas industry.
To be blunt, there is very little on the long side to apply new cash too as every sector I like (but this one) has run up substantially - so I have an absolute dearth of new names that I want to apply cash to - heck I am looking at a China railroad at this point as the pickings are so slim out there. I hope I can apply some more cash into this group if this move is for real. Again, a sector I really like for the long run, but awaiting some technical confirmation that its time to really move heavy into the names.
Long all names in fund except Nabors; long Atwood Oceanics in personal account
