26
Apr

Wrap – Week Ended 04/25/08

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What a week! Rally, rally, rally, dollar strength related pause, rally. Several of our favorite names turned in double digit share price performance and we not only didn't sell during that little bout of sector indecision on Wednesday/Thursday but added to some of our names as strong earnings and strengthening stories weren't being reflected in the stocks (see below with regard to Newfield). E&P 1Q08 results are shattering records for production and CFPS growth, and for increased guidance, while service-land is seeing the corner turn in North America while international prospects remain strong. This coming week marks the third week of Energy earnings season and the big cap E&Ps and refiners are on deck to report. We continue to take profits as the energy sectors rally while positioning the portfolio for further gains in select names. 

Holdings Watch: Closed Positions For The Week Just Ended.

  • Sold the second half our of (SLB) May $100 call position, purchased for the earnings call, up 182%,
  • Sold the (HAL) May $47.50 calls for a 2 day 85% gain,
  • Sold the (HK) May $20 calls, (held for about 3 weeks), up 245%,
  • Sold the (HK) May $22.50 calls, up 133%. I was a bit overexposed to the name and have brought this one back into a little better balance as the stock rallied to new highs on the back of (SWN)'s 1Q report.

We continue to hold about two dozen positions in nearly a dozen names. Subscribers can click here to see the current list.

Non-subscribers can click here to check into pricing and to find out how to get on board.

Being in the right names. I'm not saying I never step on a land mine in picking names but I alway have a thesis (right or wrong) when investing and I stick with that thesis (and the names that benefit from it) during those red days (like last Thursday) when it seems the Street hates the group and loves the financials, retailer, or some other idea du jour.

Case in point, (NFX) turned in a stellar quarter, said all the right things on the conference call  (see my pre and post call note here) and yet the stock was unable to turn the tide of a strong dollar / weak crude day on the day it reported. So it ends the down and the talking heads are singing "this is it, please let me go" with regard to energy saying the group is done, and that investors are rotating into those flavor of the day names. We've been in and out of NFX half a dozen times this year alone, and we were long for the call, and added another position during the Q&A. Friday the stock closes up 6% at an all time high and further gains are likely as the smelling salts of strong results wake up Wall Street.

We did the same for (SLB), (HAL), and (NBR) but avoided the landmine of a quarter (BJS) turned in.  Some of that is luck for sure but some of it is keeping a tight pulse on the sectors you follow and having our thesis in place gives you the ability, to say, "wait a minute, that's not right, that should be going up ...thanks for the gift pal."

The Energy Wrap

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1) Energy Equities Turned In Mixed Bag Performance For The Week. The group did see a little profit taking as nervous hands coughed up recently acquired positions. It's hard to blame people for taking profits after such a run but just because something is doesn't mean its expensive. I'll have revised multiples in Monday's post for the various energy sectors. 

2) Natural Gas Short Position At Another Record; Gas Continues On To New Highs. CFTC data shows a bigger bet than ever is being placed on a decline in natural gas prices. Gas continues to rally and the argument that supply growth is at record levels continues to fall on deaf ears. 

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Have a great weekend everyone!

One Response to “Wrap – Week Ended 04/25/08”

  1. 1
    Nicky Says:

    Hi Z – it seems your comments regarding supply of natural gas could apply to wti too. I heard this weekend that there are tankers full of crude sitting out in the Gulf of Mexico with nobody wanting to take delivery of the stuff – we are awash with it literally. Same source said that one of the world’s most successful commodity traders (didn’t get his name) has taken a very big bet that crude is going back to $80.

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