Around the Portfolios
Fourth-quarter earnings season was anything but uneventful for some of our Portfolio holdings.
Focus List Update: Holding Their Own
Our stock selection in the upstream segment has proved fortuitous in an earnings season where the market has punished companies that reported disappointing results and/or guidance.
Narrowing Our Focus
We narrow our Focus List and dig deep into our picks’ fourth-quarter results to kick the tires on our investment theses.
Focus List (Mostly) Outperforms and Portfolio Updates
The improved outlook for oil prices and the rotation into energy stocks has lifted most boats in the sector, though we’re pleased that nine of the 13 names on our Focus List have outperformed the S&P 500 Energy Index over an equivalent holding period. We review our Focus List and discuss earnings and other pertinent developments affecting our Portfolio holdings.
MLPs: Review and Outlook
We explain why we remain selectively bullish on master limited partnerships in 2018, discuss key opportunities and areas of risk, analyze trends in mergers and acquisitions, and highlight our favorite picks for the coming year.
Focus List: Upgrades and a Value Swap
We swap one value-oriented play on the Permian Basin for one that offers exposure to more near-term upside catalysts.
Focus List
We have increased our exposure to exploration and production companies in recent months, focusing on names with solid balance sheets and franchise assets that legitimately could live within cash flow. Third-quarter results from these companies were a mixed bag, though their stocks have rallied.
Paradigm Shift in MLP Land
Big changes are afoot in the midstream segment. Many master limited partnerships appear to have taken Enterprise Products Partners LP’s lead and shifted their focus to building distribution coverage and reducing equity. We explore which names will be able to make this transition with relative ease and which names face more of a slog to put themselves on a path to sustainability.
Upstream Overview: Thoughts on Q2 Results
Within the upstream space, we continue to focus on names with low costs, solid balance sheets, high-quality acreage in the STACK and Permian Basin, and the flexibility to monetize noncore assets or retain cash flow through captive midstream MLPs.
Although our outlook for oil prices and the US energy patch favors an overweight position in core midstream holdings, nimble investors can generate alpha in upstream names by buying when oil prices retreat to the low end of their range and taking some profits off the table when they recover. Timing and stock selection—easier said than done with shorter cycle times—will be critical to producing differentiated returns. Adhering to our Dream Prices can help in this regard.
Permian Basin to Take Market Share in a Short-Cycle World
Break-even rates continue to fall across the board in US shale plays, but the efficiency gains that come from exploiting multiple oil-bearing formations with the same infrastructure give the Permian Basin an edge in the battle for market share.
 |
|||
 |
 |
 |
|
 |
|||
 |
 |
||
 |
|
|
|
Live Chat with
Elliott and Roger on Sep. 27, 2018
Portfolios & Ratings
Model Portfolios
Balanced portfolios of energy stocks for aggressive and conservative investors.
Coverage Universe
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
MLP Ratings
Our assessment of every energy-related master limited partnership.
International Coverage Universe
Roger Conrad’s coverage of more than 70 dividend-paying energy names.
Experts
-
Elliott H. Gue
Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor
-
Roger S. Conrad
Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor