Feature Article

We’re in between earnings seasons. So, news flow from recommended Portfolio companies has been relatively sparse compared with a month or so ago. The important thing is what we have seen continues to demonstrate the business resilience of our positions.

There’s no doubt it’s been a disappointing summer for energy stocks. Energy stocks were the best-performing group in the S&P 500 from the March 23^rd lows through the June 8^th peak, soaring 96.5%. However, from June 8^th through the present date, energy reversed course, falling about 22.9% compared to a return of just under 9% in the S&P 500.

Q2 results and guidance updates are all in for Model Portfolio and High Yield Energy List recommendations. The bottom line is in the worst quarter for the US economy in at least 90 years, all defended their strong balance sheets and stayed on track for long-term growth.

Q2 numbers were always going to be weak. And that was bound to be the case whether we were talking about dominant companies like Enterprise Products Partners (NYSE: EPD) and Kinder Morgan Inc (NYSE: KMI), or the biggest basket cases on our Endangered Dividends List.

Roughly one-third of the Model Portfolio and High Yield Energy List companies have now announced their Q2 results and updated guidance. As expected, the numbers weren’t pretty. And guidance wasn’t everything we could have hoped for either, with most companies expressing a generally cautious outlook.

For the upstream, downstream and services companies in our coverage universe, the top driver of stock market performance is likely to remain the macro picture, particularly for crude oil prices. In that regard, oil prices today are trading close to flat with their early March trading range.