I am keeping some of my oil stocks, no more than 10% of my overall portfolio as a call option on crude. I am only bearish on crude because the trend is now lower. However, if we’d simply use our grey matter and understand that the recent price decline will eventually lead to a great reduction in US rig counts and subsequent cap ex budgets, at a time when the economy is growing at an astounding 5%, we’d easily surmise that lower oil prices is now something that is unsustainable. That’s right. Despite all of my arch-pessimism, there is an extremely bullish case for oil stocks setting up in 2015.
To that end, I remain long SLCA, DVN, FMSA and ECR.
However, I am not keenly focused on crude at the moment. There are global games being played in that arena and I don’t have an edge.
These are some of my stronger ideas, with a one or two liner explaining my thesis.
DTSI: Electronics maker and chief competitor to Sonos. I wrote a piece on it a month ago.
JAZZ: Don’t sleep on narcolepsy.
FRO: Super-contango and lower Brent prices is bullish for oil tanker storage.
AMZN: Fuel prices.
SBUX: Aspirational.
HABT: The MCD killer.Shake Shack ipo should keep this popping throughout 2015.
LB: Thongs.
KMB: Domestic sales. Staple.
BID: One of my 30 year hold stocks.
PZZA: Fuel prices.
WFM: Aspirational.
Gas station plays: CST, CASY, TA and IMKTA.
STZ: Domestic sales.
Researching: AIRT
In summary, I am bullish on aspirational brands because lower fuel expenses pushes the poor guy to his local SBUX for a frappacino. Think of the economy as a video game and a bunch of disheveled poor guys just got upgraded. They will take their new found riches to stores that were slightly out of their price range, in order to bask in their new found riches, and spend it all. They will also extend their credit and delve deeper into debt, which is bullish for COF. I am bullish on cleaner eating and healthier choices. Rich or poor, Americans are moving in this direction, which is also bullish for WWAV, HAIN and CALM. Yes, eggs are healthy for you.
Domestic retailers are where you want to keep your money, thanks to our walled gardens. Avoid companies who whore their wares to third world neanderthals. These corporations are gluttonous and shall be punished. Stocks like CHD, CLX and IR will do well.
I also think AMZN busts loose soon and YELP catches a bid.
All of my bad trades in 2014 were in retarded stocks. I will try my hardest to avoid these cavernous black holes, until I fully regain my mojo of course.
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FIG
Fly, at what price range do you think oil will bottom? How low could FMSA go? Any views on HAL, NBL? Thanks, wish you and yours a rockin ’15!
Oil can easily trade to the $40’s. All oil stocks will get crushed if that happens. I have no real edge in crude, but know that the reduction in Capex will eventually lead to a very bullish scenario for oil. We can be 1-2 quarters away from that, however.
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… so what’s this I hear about a culinary tale that tops “King Cobra Hearts” ?
Care to favor us with a story ?
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… NO pictures please !!!
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Alf, I promise you this story is far worse than the amateur King Cobra ordeal. This as told to me during the holiday’s and I have been hesitant to tell it to you.
I will unleash this tale tomorrow.
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… waiting with trepidation !
GULP !!!
😯
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Alf thought you were banned. Have you been absolved of your sins ?
Thanks Fly! Looking forward to seeing Revenge Of The Fly next year.
Prometheus — Crunched the numbers on oil —
In last 25 years, this is the 3rd worst decline — 2008 and 1991 were worse. Those two took 4 and 5 months respectively to bottom after hitting an arbitrary threshold I made which is -25% decline in a rolling quarter.
This is month 2/3 of the decline, so odds (not probabilistic odds since sample size is too small, just comparative basis) that actual oil low for the next 8-12 months occurs within 1-2 months from now and with a max aversion into the low to mid 40s (which would match the #1 oil decline of the last 25 yrs, 2008 crash).
<a href="https://www.tradingview.com/x/h6I5Ua0v/"Crude Oil Monthly and Rolling Percent Declines, Red indicates Decline is worse than -25% in a qtr. threshold
In any event — “…there is an extremely bullish case for oil stocks setting up in 2015.” Agree 100%
well messed up the link but if you remove the “Crude” at the end it will work, sorry, A game, cmon
Well, i will end 2014 with a -1.5% return….which is awful. But it gets worse — I am in a -6% drawdown going back to 2012. 2013 was an up year, and 2014 just shy of flat, but 2012 was awful, thus i am still in a hole.
I am massively modifying my strategy for this year…running systematic trades seeking only an average 12% annualized return.
Should be easy…
Huggie, the year is young. Anything can happen between now and year’s end.
hahahaha no no, i mean yes i could get my 1.5% back…but i doubt it. I am positioned pretty conservatively.
1991 and 2008 were recession years, which makes this decline different.
Definitely, and great point.
Also, contextually, oil ran for years, culminating in 300% run to 140 before 2008 crash (which coincided with mkt crash), whereas now last 4 yrs has just been rangebound in 70-100.
BX ftw bruh
I own it
not enough
You don’t know shit, mother fucker.
LOL!
These low oil prices will last a year and a half or so. Rigs are under contract, drilling has to be done, executives have to be paid, debt has to be covered with cash flow, oil will be sold at whatever price it can get. In time new development will decline and demand will increase to get prices going back up again.
what happened to the Jake Gint blogger blast from the past seasonal special?
Ouch…ECR $440m equity raise. Diluting shareholders without even giving them a chance to participate in the equity raise? E&P management teams show their true colors when crude tanks.
Nice open on ECR, very bullish
BLCM running, holding on to it and JUNO thankee Fly.
Shake Shack filed the S1
All about IWM XIV and SHAK
Here’s a terrific article for all the NY Islander Fans here at iBC
http://www.fantasysportaction.com/pro-blog/401-from-the-isle-12-29-14.html
The time has come! http://www.bloomberg.com/news/2014-12-29/shake-shack-files-for-initial-offering-of-meyer-s-burger-chain.html