Sweet 16 Update - Dec 15
Posted: Sat Dec 15, 2018 2:50 pm
The overall market, oil and gas prices were all down big on Friday and the Sweet 16 got hammered. The portfolio declined 7.3% during the week that ended December 14 and almost all of the decline was on Friday.
IMO the overall FEAR in the market is the primary driver of this selloff because the fundamentals for oil & gas don't justify where these stocks are trading today.
The Sweet 16 is down 33.2% YTD. Since 2001, the first year that I came up with the Sweet 16, the portfolio has only finished two previous years down for the year (2008 and 2014). If the share prices don't rebound, this will be the worst year EVER. The 2014 decline was 24.7% and four stocks actually finished higher for the year.
What's weird and why I think the Sweet 16 is grossly oversold:
> The group is on-track to have higher year-over-year reported earnings. Q4 results should be much better than the market is anticipating. Keep in mind that WTI peaked in Oct. at $75.56.
> All of them will report solid YOY production growth
> Most of them can live within cash flow from operations at $50 oil and still grow production
> Year-end reserve reports should show much higher proved reserves
> FEAR is driving this selloff.
We need the Wall Street Gang to believe that oil has found a floor price in the low $50s.
IMO the overall FEAR in the market is the primary driver of this selloff because the fundamentals for oil & gas don't justify where these stocks are trading today.
The Sweet 16 is down 33.2% YTD. Since 2001, the first year that I came up with the Sweet 16, the portfolio has only finished two previous years down for the year (2008 and 2014). If the share prices don't rebound, this will be the worst year EVER. The 2014 decline was 24.7% and four stocks actually finished higher for the year.
What's weird and why I think the Sweet 16 is grossly oversold:
> The group is on-track to have higher year-over-year reported earnings. Q4 results should be much better than the market is anticipating. Keep in mind that WTI peaked in Oct. at $75.56.
> All of them will report solid YOY production growth
> Most of them can live within cash flow from operations at $50 oil and still grow production
> Year-end reserve reports should show much higher proved reserves
> FEAR is driving this selloff.
We need the Wall Street Gang to believe that oil has found a floor price in the low $50s.