Sweet 16 Update - Mar 30

[dan_s]

I hope all of you are enjoying your Easter weekend. I also hope all of you know the real meaning of Easter. It's not about a bunny.

For the short trading week that ended on Thursday, March 28 the Sweet 16 gained 3.19% and is now up 14.25% year-to-date. A very good quarter!
The S&P 500 Index gained 0.43% and it is now up 9.84% YTD.

Money managers are rotating money into the Energy Sector, which should be the best performing sector during the 2nd quarter since demand for oil-based transportation fuels should exceed supply for at least the next four months (see slide 2 of my March 23 podcast). U.S. and OECD refined product inventories are below normal for this time of year already and the global oil market is much tighter than it was at the beginning of this year.

SilverBow Resources (SBOW), which is up 17.4% YTD, has drawn lots of overdue attention because of the unsolicited bid by a large shareholder who was hoping to take control of the Company at a bargain price. SilverBow's Board has rejected the offer, but it may just be part of the negotiations to get a much higher bid. Remember that all public companies are really "For Sale" if the offer is high enough. Lots of energy sector analysts and investors now know more about this outstanding aggressive growth company. On February 10th SBOW was down 8.73% YTD. News of a potential takeover is a "Good Thing", because of the attention it draws.

SBOW has been trading at a deep discount to my valuation because management has not done a good job of telling the story. I've tried several times to get them to host a luncheon or webinar for us.

SilverBow is going to report a BIG INCREASE IN PRODUCTION from Q4 to Q1, so hang tough on this stock. There is a lot more upside for us.

Matador Resources (MTDR) is doing some balance sheet restructuring, which includes a 5,250,000 share stock sale. Having the ability to raise equity is a GOOD THING. Matador is an Aggressive Growth company that actually needs more stock on the market (float) to increase trading volume. After the equity sale they will still only have 125 million shares of common stock outstanding; low for a Company with over 150,000 Boepd of production.

Matador increased production 22.4% in 2022 and another 24.9% in 2023. Based on the midpoint of the Company's guidance, which they always beat, production should be up another 18.5% in 2024. Matador has some very good "Running Room" in the Delaware Basin. Recent well results have been fantastic. It is a good bet that the money from the stock offering will accelerate oil production growth in 2H 2024.

Leading the pack are:
> Permian Resources (PR) up 29.85% YTD
> SM Energy (SM) up 28.74% YTD
> Diamondback Energy (FANG) up 27.79% < Getting close to my valuation of $200.
> Magnolia Oil & Gas (MGY) up 21.89%

Range Resources (RRC), up 13.11% has moved above my valuation of $31.50. It is a "gasser". It does have a good hedging program that has insulated it from low natural gas prices this year. At best I rate RRC a HOLD, only for investors bullish on natural gas. I do think natural gas prices will rebound, but if they don't, there is a lot of risk in RRC.

EQT Corp. (EQT) is the other large-cap "gasser". It is down 4.11% YTD, closing at a 16% discount to my current valuation of $43.00.

EOG Resources (EOG) is the largest company in the Sweet 16 and it is down 1.3% YTD. EOG has incredible Running Room and it pays a very good dividend. I might move it into our High Yield Income Portfolio.

Vital Energy (VTLE) is up 15.5% YTD. At $52.54 it still trades at a 97.9% discount to my valuation of $104.00

Talos Energy (TALO) is down 2.11% YTD. I like the fact that they monetized their Carbon Capture & Sequestration (CCS) business. The Company is going to report BIG INCREASES IN PRODUCTION from Q4 to Q1 and an even bigger increase in Q2 thanks to the closing of the QuarterNorth Acquisition on March 4th.

[allen46]

Unfortunately, Biden thinks Easter is all about honoring transgender people.

[dan_s]

Very sad. Joe Biden has lost his way.