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There’s Deep Value in Energy

By Roger S. Conrad on May. 22, 2019

For the past five years, it’s become an all too familiar refrain for energy investors: Oil and gas prices drop, but sector stocks fall harder. Then when prices rebound, the shares lag the recovery.

The pattern has also largely held this year, despite the fact that the S&P Energy Index has consistently shown up among the top performing S&P 500 sectors. No matter how positive underlying conditions have become, many investors still favor the commodities to energy stocks.

On the other hand, it’s much harder to ignore the good news that’s increasingly flowing from American energy companies. First quarter 2019 results once again showcased the recovery up and down the energy value chain. And as highlighted in the previous issue, the macro outlook strongly suggests this will continue.

In this issue, we highlight Actively Managed Portfolio company results. The real story in energy, however, just might be a budding revival of M&A, rooted in a deep value story that both institutional and retail investors have to date either ignored or feared to dive into.

Our May 13 Energy Commentary “From Berkshire to Buckeye: Value Hunters Finding Energy” highlights a pair of recent deals that clearly demonstrate interest in energy by well capitalized value hunters. And at least one of the principal players, Warren Buffett’s Berkshire Hathaway (NYSE: BRK/B), is clearly interested in doing more business at the right price.

Energy & Income Advisor

Your complete guide to energy investing, from growth stocks to high-yielders.

In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.

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      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor

    • Roger S. Conrad

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor