26
Jun
Wrap – Week Ended 06/24/22
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The ZLT was off 4% on the week last week vs a broad market rally and an energy sector that largely ebbed (gassy stocks of the XNG up 1.2% but the XOP off 5.8%). Notice the gassy equities were up on a further 10% decline in front month natural gas. This week is quarter end so there's that but post quarter we expect the group to begin rounding higher ahead of 2Q22 reports. The Freeport incident is a red herring. Renewables rallied modestly and solar looks to be better in 2H22 vs 1H22.
Our thoughts from last Tuesday's opening section remain unchanged:
To Be Clear On Upstream Names After A Turbulent Week For Commodity Prices Watch:
- We like what we own in the upstream space.
- We've been adding to it.
- Our oily names sport low to extremely low forward multiples based upon commodity prices that are well below current strip on oil and in line on natural gas (for 2022, our 2023 is well below strip).
- Our names generally have exceptionally strong balance sheets and are free cash flow at, again, much lower prices, and are in a number of cases returning increasing amounts of capital back to us.
- We've also reviewed several unowned names lately that are falling back to what some, not us, but some would call generational buying opportunities. We think they are definitely worth a look for the trade oriented. Ask about them in the comments section.
- We have been adding to both oily and gassy names in small bites as the group retreat hit tonight.
- We've included the Gassy Players Update in today's post given the magnitude of the moves last week.
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Free Stuff Last Week:
Holdings Watch:
- We added to two of our Oil Service names last week.
- The blotter is updated
Questions about the site may be directed to zmanalpha@gmail.com or zman@zmansenergybrain.com (CC them as a lot of mail has been routed to spam of late).
Questions under The Wrap will be addressed in the Monday post.
Have a good weekend,
Z
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Z, Where do you see the opportunity to trade?
June 26th, 2022 at 10:16 amre 1 – please expand on your question and it will be addressed in the Monday post. Oily, gassy, oil service names, time frame (really a trade or a position?), etc. Thanks.
June 26th, 2022 at 10:26 amCHK execs bought the CHK share price selloff, according to Barrons:
https://www.barrons.com/articles/energy-stocks-oneok-chesapeake-energy-51656010688
June 26th, 2022 at 7:27 pmre 3 – thanks
June 26th, 2022 at 8:24 pmyou wrote this in your comments:
“We’ve also reviewed several unowned names lately that are falling back to what some, not us, but some would call generational buying opportunities. We think they are definitely worth a look for the trade oriented. Ask about them in the comments section.”
June 26th, 2022 at 9:48 pmRe 3 Quite the very high volume reversal at previous acceptance (76.75) and back into value for month…
Daily
https://ibb.co/Jrnf5YW
June 27th, 2022 at 12:15 am