Year To Date Gains Stand At 20%

In what will unquestionably become the “Hubris Top Tick” post, I will go on the record and admit that yesterday, my account crossed 20% gains this year for the first time.

CCJ sealed the deal for me. After taking a nasty selloff, it exploded over the last week and a half, up 14%, which accounted for half the push from my prior 15%. The other half got picked up here and there.

I’m unsure how long I’ll be hanging out here. HCLP, which is without a doubt the hero of 2014, is reporting earnings first thing in August. The partnership has come a hell of a long way. Will this lead to a pullback? It wouldn’t surprise me, although I’ve decided to hold fast and keep the faith.

The coal trade isn’t working yet; but then again I did decide to forgo a quick entry, opting for steady accumulation. So a slow start is actually better for me.

Bought Back More HCLP for $59.39

Over the past week or so, I raised cash to 25%. This was good fortune, as HCLP, my mantelpiece position, has dropped 8% since I let up.

Today, I repurchased half of those shares, which I sold at $64.19 each, for $59.39.

It seems like good enough of a bet to me. HCLP is growing so fast… it’s trading at just over 17x Q3 2014 earnings estimates. I have no good way to guess what HCLP’s earning’s potential is over time; but 17x doesn’t seem unreasonable, particularly with a steady announcement of 5 year supply agreements being announced and 200% revenue growth last year. When you’ve managed to get in on the ground floor of such a high flying position, it just makes sense to hold long a core stake, and ride the waves.

This 8% drop is just another opportunity to make extra money, until such time as that logic is challenged. For the moment, HCLP just managed to touch its 20 day moving average for the first time since early June.

Next earnings announcement is in August. So tell me, who wants to stand in the way of this thing?

A Global Power Shift Is Emerging

Short term cautions not withstanding, we are on the precipice of something great.

The entire structure of the global economy is shifting, slightly and slowly. But like all great change, the most striking of the movement comes all at once, at the end.

The United States is driving this assault of the balances of power, globally, as the energy revolution progresses on our shores. This country is set to become the biggest oil producer in the world – and we are now slowly removing the export restrictions that are the last remaining barrier to this mighty end.

This isn’t just about US trade balances and deficits. Those numbers games matter, but they always matter less than you think.

This game is about power. Oil has been the source of power to our enemies for too long. Russia and the Middle East have fed well on global consumption of this product, erecting their cartels around the flow oil to global industry. It has made them powerful and a threat.

The move by the US to become the world’s largest producer of oil and gas can be viewed through a different lens than financial gain alone: this is also going to completely upend our adversaries. What wars and weapons and diplomacy and cooperation could not possibly have accomplished, given the entrenched interests we faced, this one might push on our part will quickly bring about.

This is a once in a lifetime opportunity. You must get invested in it, and stay invested in it. All US leadership sees the goal, and no one objects to it. The days of getting beat about by monarchies in Saudi Arabia, needing to cut backroom deals that undermine our own morals with foreign militant groups, having to sit through endless meetings while Russian oligarchs threaten our allies with gas supply shortages…these days are coming to an end.

As the US increasingly becomes energy independent, the argument to even have relations with half these villains becomes non sequitur. We can marginalize them while circling around our true allies and real friends.

I can’t see everything that is going to come from this. Naturally US power will follow. And the North and South American continents should improve, swinging towards democracy and capitalism. Outside of that, while I think US energy independence is a good thing, I wouldn’t be surprised if war also follows. Revolutions surely, but also open war between foreign, former energy exporters who find themselves being boxed into a corner. The Saudi’s days are surely numbered, in particular.

My bet is that Russia will not change much, but they will also have to cut less lucrative deals with China to make it. So at least they will be a less powerful, less interfering Russia. Good riddance there.

Suffice to say, this is unpredictability at its best. While I think I see the theme, I do not yet hear the notes. But I’ll take my chances with it anyway. The old order of things was repulsive. I won’t be crying any tears for OPEC, or for Russia.

Up Another 1% Again Today

HCLP just blew through $60, as analysts raise targets in response to the HAL announcement.

BAS is back above $27. I guess I could have held onto all of those shares, but I have no regrets. Retaining a 15% position in BAS is more than reasonable.

SLW is pushing its way to $26.

My only position that is down noticeably today is UEC. And that remains my smallest position at 5% of assets.

Fracking investments remain the place to be. Oil names are doing well by extension (and a high price per barrel). I’m telling you, coal will be the next thing to run.

Have a wonderful afternoon.

Reduced Size Of BAS Position To 15% Of Assets

I made a large series of sales in BAS for $26.23 on average. These shares were sold for an average gain of 116% from my initial purchase price a few years ago.

This sale brings BAS back in line to a 15% position in my portfolio. It had been almost 25%. The 10% cash raise will sit on my books for now.

I ran some numbers, and from their last report, I’m thinking BAS was probably worth about $8 a share. This massive move higher has been from the company managing to stop the losses they were taking every quarter. However, the next major risk to the shares will be execution; can the company turn a profit?

I think I can see how the company could make $1.60 a year in earnings pretty easily. That puts an 11 year break even point, which is about the top end of my acceptable range. At this junction, the shares are a fair price, in my book.

But I love the company, so I’ll be keeping the 15% position I have in them. I think they don’t just turn $1.60. I think they surprise us all and make $2.50-3 per share annually, sending the shares into the $30-40 range.

I cannot justify keeping the massive ~25% of my portfolio in BAS though. That’s too much, and I do have a lot of money sitting on the table here. I’m only willing to take regular risks that Basic Energy Services makes the next step successfully, even though I’m confident they will.

Year To Date Gains Back At 15%

This sudden resurge of equities has propelled me back to all time highs; and nothing is “surgier” than Hi-Crush Partners LP (HCLP).

Last night, they announced an amended supply agreement with Halliburton (HAL), for the usual terms – more committed volumes, higher prices, certain benchmarks for yet greater volumes at even higher prices still…etcetera etcetera.

This follows an announcement on the 17th of June for much the same deal with Liberty Oilfield Services.

The culmination of these announcements has sent HCLP to $58.50, at time of this correspondence, gracefully and effortlessly taking out new all time highs of its own.

For the year, I have only one bad investment, and that is NRP. At least, for now. Aside from that, it has been all gravy trains and cocaine buffets.

Up next on the menu: the EPA announcement of new power plant regulations will be recognized as the exact floor for coal stocks.

Get some while the getting is good.

Year To Date Gains Stand At 20%

In what will unquestionably become the “Hubris Top Tick” post, I will go on the record and admit that yesterday, my account crossed 20% gains this year for the first time.

CCJ sealed the deal for me. After taking a nasty selloff, it exploded over the last week and a half, up 14%, which accounted for half the push from my prior 15%. The other half got picked up here and there.

I’m unsure how long I’ll be hanging out here. HCLP, which is without a doubt the hero of 2014, is reporting earnings first thing in August. The partnership has come a hell of a long way. Will this lead to a pullback? It wouldn’t surprise me, although I’ve decided to hold fast and keep the faith.

The coal trade isn’t working yet; but then again I did decide to forgo a quick entry, opting for steady accumulation. So a slow start is actually better for me.

Bought Back More HCLP for $59.39

Over the past week or so, I raised cash to 25%. This was good fortune, as HCLP, my mantelpiece position, has dropped 8% since I let up.

Today, I repurchased half of those shares, which I sold at $64.19 each, for $59.39.

It seems like good enough of a bet to me. HCLP is growing so fast… it’s trading at just over 17x Q3 2014 earnings estimates. I have no good way to guess what HCLP’s earning’s potential is over time; but 17x doesn’t seem unreasonable, particularly with a steady announcement of 5 year supply agreements being announced and 200% revenue growth last year. When you’ve managed to get in on the ground floor of such a high flying position, it just makes sense to hold long a core stake, and ride the waves.

This 8% drop is just another opportunity to make extra money, until such time as that logic is challenged. For the moment, HCLP just managed to touch its 20 day moving average for the first time since early June.

Next earnings announcement is in August. So tell me, who wants to stand in the way of this thing?

A Global Power Shift Is Emerging

Short term cautions not withstanding, we are on the precipice of something great.

The entire structure of the global economy is shifting, slightly and slowly. But like all great change, the most striking of the movement comes all at once, at the end.

The United States is driving this assault of the balances of power, globally, as the energy revolution progresses on our shores. This country is set to become the biggest oil producer in the world – and we are now slowly removing the export restrictions that are the last remaining barrier to this mighty end.

This isn’t just about US trade balances and deficits. Those numbers games matter, but they always matter less than you think.

This game is about power. Oil has been the source of power to our enemies for too long. Russia and the Middle East have fed well on global consumption of this product, erecting their cartels around the flow oil to global industry. It has made them powerful and a threat.

The move by the US to become the world’s largest producer of oil and gas can be viewed through a different lens than financial gain alone: this is also going to completely upend our adversaries. What wars and weapons and diplomacy and cooperation could not possibly have accomplished, given the entrenched interests we faced, this one might push on our part will quickly bring about.

This is a once in a lifetime opportunity. You must get invested in it, and stay invested in it. All US leadership sees the goal, and no one objects to it. The days of getting beat about by monarchies in Saudi Arabia, needing to cut backroom deals that undermine our own morals with foreign militant groups, having to sit through endless meetings while Russian oligarchs threaten our allies with gas supply shortages…these days are coming to an end.

As the US increasingly becomes energy independent, the argument to even have relations with half these villains becomes non sequitur. We can marginalize them while circling around our true allies and real friends.

I can’t see everything that is going to come from this. Naturally US power will follow. And the North and South American continents should improve, swinging towards democracy and capitalism. Outside of that, while I think US energy independence is a good thing, I wouldn’t be surprised if war also follows. Revolutions surely, but also open war between foreign, former energy exporters who find themselves being boxed into a corner. The Saudi’s days are surely numbered, in particular.

My bet is that Russia will not change much, but they will also have to cut less lucrative deals with China to make it. So at least they will be a less powerful, less interfering Russia. Good riddance there.

Suffice to say, this is unpredictability at its best. While I think I see the theme, I do not yet hear the notes. But I’ll take my chances with it anyway. The old order of things was repulsive. I won’t be crying any tears for OPEC, or for Russia.

Up Another 1% Again Today

HCLP just blew through $60, as analysts raise targets in response to the HAL announcement.

BAS is back above $27. I guess I could have held onto all of those shares, but I have no regrets. Retaining a 15% position in BAS is more than reasonable.

SLW is pushing its way to $26.

My only position that is down noticeably today is UEC. And that remains my smallest position at 5% of assets.

Fracking investments remain the place to be. Oil names are doing well by extension (and a high price per barrel). I’m telling you, coal will be the next thing to run.

Have a wonderful afternoon.

Reduced Size Of BAS Position To 15% Of Assets

I made a large series of sales in BAS for $26.23 on average. These shares were sold for an average gain of 116% from my initial purchase price a few years ago.

This sale brings BAS back in line to a 15% position in my portfolio. It had been almost 25%. The 10% cash raise will sit on my books for now.

I ran some numbers, and from their last report, I’m thinking BAS was probably worth about $8 a share. This massive move higher has been from the company managing to stop the losses they were taking every quarter. However, the next major risk to the shares will be execution; can the company turn a profit?

I think I can see how the company could make $1.60 a year in earnings pretty easily. That puts an 11 year break even point, which is about the top end of my acceptable range. At this junction, the shares are a fair price, in my book.

But I love the company, so I’ll be keeping the 15% position I have in them. I think they don’t just turn $1.60. I think they surprise us all and make $2.50-3 per share annually, sending the shares into the $30-40 range.

I cannot justify keeping the massive ~25% of my portfolio in BAS though. That’s too much, and I do have a lot of money sitting on the table here. I’m only willing to take regular risks that Basic Energy Services makes the next step successfully, even though I’m confident they will.

Year To Date Gains Back At 15%

This sudden resurge of equities has propelled me back to all time highs; and nothing is “surgier” than Hi-Crush Partners LP (HCLP).

Last night, they announced an amended supply agreement with Halliburton (HAL), for the usual terms – more committed volumes, higher prices, certain benchmarks for yet greater volumes at even higher prices still…etcetera etcetera.

This follows an announcement on the 17th of June for much the same deal with Liberty Oilfield Services.

The culmination of these announcements has sent HCLP to $58.50, at time of this correspondence, gracefully and effortlessly taking out new all time highs of its own.

For the year, I have only one bad investment, and that is NRP. At least, for now. Aside from that, it has been all gravy trains and cocaine buffets.

Up next on the menu: the EPA announcement of new power plant regulations will be recognized as the exact floor for coal stocks.

Get some while the getting is good.

Previous Posts by Mr. Cain Thaler