Energy Sector

[Blake Hampton]

I didn’t know the peace deal consisted of Iran continuing to hit people with missiles.

 

Is this not a board of value investors? Why are there many here so incessantly fixated on today’s prices? Prices today mean zero outside of your option to buy or sell. And of course this goes beyond just the price of oil. I mean, my god. The last two decades nearly have been a time of general exuberance across markets: easy credit, low interest rates, low inflation, booming asset values, everything in the book. And while two decades in the context of time is nothing but a blip, there has been so much emotion and prediction within that period.

 

Fundamentals are the only measurable thing that matters. Very rarely do I see some gotcha post talking about how the fundamentals changed, it’s always seems to be some bullshit about prices.
 

Just because the price of an asset has performed poorly in the past is no indication that it’ll do the same in the future. It’s of course the same thing for the inverse. But yet prices seem to grab ahold of people’s souls. And I feel like people on here should know better; y’all are smarter than that. 

[Blake Hampton]

Hell, I like to talk about credit crises. If you go back and study exactly what a credit crisis is, it’s basically an event where a lot of people are forced to sell assets, all at the same time, in order to raise liquidity. Of course asset prices then crash as a result, but my point is, how does that mean anything about the value of those assets? Is real estate worth less because a bunch of people did some dumb borrowing? What about stocks because companies don’t have enough liquidity at the same time banks are in trouble? The fallout of those events can certainly have an effect as there’s contraction generally, but think about how unrelated those selling decisions are to the actual values during that period of time.

 

Markets are interesting. Buffett is right when he says that they can do just about anything, no matter how irrational.

[Blake Hampton]

One final point I’d also like to make is that markets are defined at the margin: You can have 99.9% of owners sitting soundly with their holdings, but if that 0.1% of people trading in the markets start getting real erratic, the price for a security can start going all over the place.

 

I was trading a stock a while ago where my single purchases would be the only volume in a whole trading day. I could literally set the price if I could only find a seller on the other side. I caused the price of the security one day to go down 15% or so, and since the family owned like 3/4ths of the company in a trust, they lost a lot of money that day, that is if you valued their holdings at market.

[Gregmal]

The bigger thing here, the lesson, is again, so what? if we have another conflict and maybe again oil prices temporarily surge to $100-120? What? Then we ll still have the divas whom are ALWAYS screaming about an incoming commodity super cycle keep screaming and telling everyone that we re still “going way higher”? It’s a total joke and as an investor, there’s so many better places to look for real investments…what’s with the obsession with fuckin oil? It seems like a cool thing for the Twitter divas and podcasters, but generally speaking, a horrible place to actually try to compound capital.
 

Commodity speculation is gambling; if you’re good at it, you can make a fortune, problem is everyone thinks they’re @SharperDingaan but results wise maybe only 3-5% are.

[gfp]

Take your cues from the strongest hand in the game - Berkshire sat on a large position in Chevron, earning T-bill like dividends at a lower tax rate (15.75% effective tax rate vs 21% for t-bill interest income) than bond interest, while maintaining optionality and a natural hedge should oil prices spike on any exogenous event.

 

Oil spikes.  Berkshire trims CVX and buys DAL.

 

Oil falls, CVX yield increases...  Don't be surprised if Berkshire repurchases some of that CVX it sold on the spike.

[yesman182]

1 hour ago, gfp said:

Take your cues from the strongest hand in the game - Berkshire sat on a large position in Chevron, earning T-bill like dividends at a lower tax rate (15.75% effective tax rate vs 21% for t-bill interest income) than bond interest, while maintaining optionality and a natural hedge should oil prices spike on any exogenous event.

 

Oil spikes.  Berkshire trims CVX and buys DAL.

 

Oil falls, CVX yield increases...  Don't be surprised if Berkshire repurchases some of that CVX it sold on the spike.

I’d love to know when they started selling. You think it was after the conflict started? I was kind of thinking it was before the conflict started. If we see more sales in the next 13f then I will change my opinion. 

[gfp]

1 hour ago, yesman182 said:

I’d love to know when they started selling. You think it was after the conflict started? I was kind of thinking it was before the conflict started. If we see more sales in the next 13f then I will change my opinion. 

 

 

Average price received in Q1 CVX sales at National Indemnity was $197.51 with a 3/17 approximate trade date

 

+33% gain on this tranche plus dividends received

 

 

------

 

On DAL, National Indemnity (Ted Weschler) bought $2.48 Billion of Delta stock at $62.277 / share average cost (currently $91.88)

Edited 1 hour ago by gfp

[Spekulatius]

9 hours ago, Dalal.Holdings said:

Is $69 too low? We just went through a geopolitical scenario that was the oil bull doomers’ wet dream and oil peaked at $110?

 

A lot of it because the major powers (USA, China, G7, etc) all coordinated to contain the upside…what that tells you is that the upside in oil is basically capped.

 

Now you have a large amount of DWT moving through the Strait releasing pent up supply back on the markets while you have new pipelines being built to bypass the strait, other global producers who have upped production, majors getting serious about Venezuela, UAE leaving OPEC and maybe Iraq too soo they can pump more oil…

 

$69 ain’t enough to get me interested. And if the Strait normalizes for a while, oil likely heads even lower than before the war…

The inventory drawdown wasn’t coordination. China has a large strategic oil reserve and they decided to use it in their own self interest. They avoided the shortages that have plagued counties without reserves like Phillipines and Thailand. The US drew sown their strategic oil reserve further at the same time but for different reasons.

 

The problem is you can draw down reserves only once and than what?

 

I personally  like to get back into PBR.A. It has come down some since ai sold it  but I like it lower. PBR is nice because the country does its own thing for the better or the worse which provides some diversity on its own.