It has been an amazing run of late in the oil service names, drillers, and natural resources so I am taking another layer off, anticipating a selloff relatively soon. That said I've been saying that for a few days now and they just keep ticking up. It has been nice to see the deep sea oil drillers FINALLY partake in a rally... they've been the ignored group for much of the past half year. I am cutting back ($4-$6k sells) in the following names as I am starting to get antsy on the duration and magnitude of some of these moves without any pullback. (and yes the underlying fundamentals are clearly fantastic)
- Sector oil services: National Oilwell Varco (NOV), Core Laboratories (CLB)
- Sector deep sea oil drillers: Atwood Oceanics (ATW), Diamond Offshore (DO)
- Sector natural gas: EOG Resources (EOG), Cabot Oil & Gas (COG)
On the flip side of that... in a somewhat related trade (not energy but "commodities" in general) - I am increasing exposure in
Ultrashort Basic Material (SMN) to just under 4% of the fund as a
"hedge against myself"Long all names mentioned in fund; long Ultrashort Basic Materials in personal account
5 comments:
Yo Mark,
Going on this whole commodities pullback theory. Has there ever been a chart look more toppy than X? It's like a 500 lb gorilla standing on a broomstick. I know the fundamentals are great but this thing is bound for a pull back but it just won't. I'm short this thing right now and am starting to wonder if there is something going on that I am unaware of. Buyout rumors perhaps?
what do you think about an investment in petrobras on the news about the new find off coast?
T,
Actually X looks like a great short if it does not break 148 - it appears to be forming a double top and is way overextended. You just have to be patient and have an exit plan if you are wrong i.e. say with X I'd cover at $150 or something. But just let it play out - that actually looks like a nice short potential
Surya,
PBR is something I think one can hold for kids and grandkids - there are almost no stocks that I would say one can just hold for 10 years and forget about - very different world than in the 50, 60s, 70s. But PBR is in my opinion going to be potentially the largest market cap in the world if 1/2 of these discoveries bear fruit. But it will take a long time to convert from discovery to production so there is no rush - I'd buy (and have been) on dips, and sell off on rallies, but again this is one you can tuck under the pillow and come back to in 2018 and I think a person would be pleased. Even if all these discoveries are 30% of what they are purported to be its a nationalist monopoly in the most resource rich country in South America whose economy should only boom from the "World of Shortages" situation over the coming decades. I really like Brazil and wish we had more companies to invest in.
Maybe by time grandkids reach 18 oil will not be a major energy source but somehow I doubt it ;) So thats the risk I suppose but not something to worry about for years...
I'm on the same trade as you today, Mark. I let go of the ATW I repurchased, hoping it would go lower, when it broke out at 95. It didn't, and now I felt I had to sell instead. I also cut 25% of agu, pot and mos. I hate selling big winners, but they are driving me crazy moving up like that. They still aren't totally overbought, but the risk reward is starting to shift, imo. You have a huge cash position and with the ultra shorts, I'm guessing you are at a 50% cash equivalent.
PBR is going to take a long long time to develop. I think a faster way to play it, is with the deep water drillers.
I also agree with your assessment on steel. It's the iron ore and metalurgical coal, that is the real winner. On that note, I also got rid of CLF. I'm just preying now, that something knocks that one down. It does look overbought.
Well you might need to wait at least 24 hours. Tomorrow we can drink Kool Aid and enjoy that Intel beat lowered expectations and then summarily ignore the CPI report as we ignored PPI today. :)
No major names tomorrow in earnings that should blow up - Wells Fargo probably will be weak but trumped by Intel and then JP Morgan with full government backing should be fine.
Then Thursday will be the very interesting day. If Google disappoints it will take all the Kool Aid away.
At this point I will trail on up days, and outperform on down days and probably not do much on flat days like this. I have a big margin on the indexes for the year to date, so I am ok with giving some back and staying in defensive stance for now. I expect a lot more surprises in the next few weeks and the only names I really like are off of any major support levels so when they turn, and they will turn, they will turn hard.
Post a Comment