Over the past year, we’d taken some steps to reduce the Portfolio’s risk, cashing out of SeaDrill (NYSE: SDRL) last fall and selling fracking sand specialist Hi-Crush Partners LP (NYSE: HCLP) for a roughly 60 percent gain. We also reiterated our Sell call on SeaDrill, a stock we first highlighted in 2007, on several occasions this year.
By design, our Model Portfolios also feature less exposure to oil and gas producers than many energy-focused investment advisories, though we should have lightened up our exposure to riskier, high-yielding names earlier this year.
With only a few exceptions, our Model Portfolio, MLP Portfolio and International Portfolio’s conservative allocations have delivered solid returns and held their value better than most.
This resilience reflects our overweight positions in conservatively run midstream operators—many of which are organized as master limited partnerships (MLP)—that have little direct exposure to fluctuations in oil and other commodity prices.
Our primary hedge against weaker oil prices has delivered a total return of almost 80 percent since we added the stock to the Model Portfolio in January. Equally important, this stock has rallied 44 percent since we highlighted the pick as one of our top demand-side bets in the Oct. 17 issue, Picking the Pockets of Opportunity.
Although we’ve made a lot of right moves, our Portfolios’ aggressive allocations have taken some lumps, making us wish we had booked profits more aggressively at the top.
That being said, it’s not too late to position your portfolios to thrive over what promises to be a challenging six to 18 months.
Surging production in the Marcellus Shale has also created challenges for producers and has important implications for investors and natural-gas prices in other regions.
Investors still flock to initial public offerings of master limited partnerships.
US propane exports have soared to a record high--and there's more upside to come.
With winter just around the corner, many investors and market observers wonder whether we’ll witness another spike in Midwest propane prices.
Warren Buffett's biggest investment mistake holds an important lesson for investors eyeing value opportunities in the energy sector.
We pounded the sand for Hi-Crush Partners LP in early 2013, when the stock was a high-yielding value play. Today, investors need to take their heads out of the sand and sell.
Unless we stand on the cusp of a new ice age, investors shouldn't expect a sustainable rally in US natural-gas prices.
SeaDrill has given up 36 percent of its value since the start of September, yet some uninformed market pundits continue to pound the table for the stock. These five myths about SeaDrill could cost you real money.
The stakes are high for the masters of midstream, particularly in the Northeast where surging output of natural gas has overwhelmed local demand and existing takeaway capacity, depressing the prices at Pennsylvania’s Leidy Hub relative to the Henry Hub in Louisiana.
Elliott and Roger on Dec. 19, 2014
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