Hedge fund managers are woke idiots
Re: Hedge fund managers are woke idiots
This is very bullish for our Sweet 16
"According to Goldman Prime's latest report, energy was the top shorted sector (notionally) on the bank's Prime book last week with short sales outpacing long buys 6 to 1! Yes, during the previous week when many energy names hit fresh all time highs, instead of cutting losing tech longs, hedge funds were sextupling down on their energy shorts, and as GS Prime further adds, "US Energy stocks have been net sold 7 of the past 8 trading sessions, and last week’s notional net selling was the largest in over 5 months."
It gets better: the US Energy Long/Short ratio has steadily fallen to 1.83 from its YTD peak of 2.38 in January. The Long/Short ratio is currently in only the 2nd percentile vs. the past year!
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This is bullish for our upstream companies because this is a global energy crisis. Space heating fuels are very low already and we are still in November with a Polar Vortex cold blast heading straight to Chicago a week from today. Short Covering Rallies are coming in January.
One of the topics discussed at yesterday's luncheon was the extremely low multiples of operating cash flow that all of our Sweet 16 and Small-Cap Portfolio stocks are trading at. Despite record revenues and free cash flow for most of the Sweet 16 companies, the portfolio is still trading at just 3.2 X operating cash flow for 2022. At current strip prices, the Sweet 16 should generate higher revenues in 2023.
The Great Paradigm Shift (when these fund managers figure out that this world will continue to run on oil and gas for many more years) sinks in, there is going to be a lot of money rotate from the tech sector into the energy sector. There are many funds THAT MUST rebalance to the market, so as smart investors (like EPG members) add to their energy stocks those funds must move more money into the sector. It feeds on itself.
In early 2021 we had a Paradigm Shift (the human race is going to survive Covid and keep using oil & gas), our Sweet 16 gained 132% in 2021.
"According to Goldman Prime's latest report, energy was the top shorted sector (notionally) on the bank's Prime book last week with short sales outpacing long buys 6 to 1! Yes, during the previous week when many energy names hit fresh all time highs, instead of cutting losing tech longs, hedge funds were sextupling down on their energy shorts, and as GS Prime further adds, "US Energy stocks have been net sold 7 of the past 8 trading sessions, and last week’s notional net selling was the largest in over 5 months."
It gets better: the US Energy Long/Short ratio has steadily fallen to 1.83 from its YTD peak of 2.38 in January. The Long/Short ratio is currently in only the 2nd percentile vs. the past year!
---------------------
This is bullish for our upstream companies because this is a global energy crisis. Space heating fuels are very low already and we are still in November with a Polar Vortex cold blast heading straight to Chicago a week from today. Short Covering Rallies are coming in January.
One of the topics discussed at yesterday's luncheon was the extremely low multiples of operating cash flow that all of our Sweet 16 and Small-Cap Portfolio stocks are trading at. Despite record revenues and free cash flow for most of the Sweet 16 companies, the portfolio is still trading at just 3.2 X operating cash flow for 2022. At current strip prices, the Sweet 16 should generate higher revenues in 2023.
The Great Paradigm Shift (when these fund managers figure out that this world will continue to run on oil and gas for many more years) sinks in, there is going to be a lot of money rotate from the tech sector into the energy sector. There are many funds THAT MUST rebalance to the market, so as smart investors (like EPG members) add to their energy stocks those funds must move more money into the sector. It feeds on itself.
In early 2021 we had a Paradigm Shift (the human race is going to survive Covid and keep using oil & gas), our Sweet 16 gained 132% in 2021.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group