Energy Prospectus

Stifel downgraded a bunch of our portfolio stocks this morning, but they still like Cimarex Energy (XEC). Here are their comments.

Cimarex Energy (XEC): Buy Rated, Target Price: $150, Market Cap: $9.5B, 49% Natural Gas/30% Oil/21% NGL
XEC’s returns across its core Delaware Basin acreage in West Texas and Southeastern New Mexico continue to
improve with the implementation of upsized fracs and more recently longer laterals. The company’s second leg, its
legacy Cana-Woodford, has received a face lift and is now outpacing expectations generating comparable returns to
the company’s Permian acreage and we believe the use of upsized fracs holds the
potential to expand the previously defined Cana core. XEC has one of the strongest balance sheets in our universe
with a Debt/TTM 2015E EBITDA of 0.7x, well below our peer group average of 2.0x. The stock is currently trading at
6.0x 2015E EBITDA and 78% of total NAV, a 2% discount to its peer group average.
Target Price Methodology/Risks
Our $150 target price assumes the shares trade at 8.0x 2015E EBITDA and 105% of total NAV, a 21% premium to our
projected peer group average. Risks include: Oil and natural gas price volatility, drilling results/well performance, cost
creep, availability of capital, and regulatory/environmental/tax risks.

Energy & Power
Stifel downgrades on Monday, October 27
Oil & Gas Exploration & Production

SN (Hold/$17.79) : Downgrading to Hold While We Wait on OPEC
WLL (Hold/$61.66) : Downgrading to Hold While We Wait on OPEC
SYRG (Hold/$10.88) : Downgrading to Hold While We Wait on OPEC
SM (Hold/$60.34) : Downgrading to Hold While We Wait on OPEC
PDCE (Hold/$43.61) : Downgrading to Hold While We Wait on OPEC
JONE (Hold/$11.96) : Downgrading to Hold While We Wait on OPEC
GDP (Hold/$9.44) : Downgrading to Hold While We Wait on OPEC
DNR (Hold/$12.41) : Downgrading to Hold While We Wait on OPEC
CXO (Hold/$108.99) : Downgrading to Hold While We Wait on OPEC
AXAS (Hold/$4.04) : Downgrading to Hold While We Wait on OPEC
Oil & Gas Exploration & Production: Downgrading Group While We Wait on OPEC

"Downgrading to Hold While We Wait on OPEC"

sadly, this analyst comment seems to sum up the entire foreign policy....or lack thereof... from this current White House team.

call it "leading from behind".....

"...while we wait on OPEC"
"...while we wait on the U.N."
"... while we wait on the next political polling data"
"....while we wait on the midterm elections
"...while we wait on ____________________ (fill in the blanks)

sigh

"Leadership"

Strong Leaders have the following characteristics:

1. Leaders have a clear VISION that motivates their followers
2. They are good COMMUNICATORS. Their followers are able to understand the vision and see how it relates to their lives.
3. They are good at POSITIONING. They know how to build a smart and motivated team. They do not surround themselves with "yes men" and they are good at delegation to other smart people that share their vision. Leaders know "what they don't know" and are not afraid to have people smarter than they are on the leadership team.
4. They have SELF-DISIPLINE. Good leaders are tireless workers themselves, fully dedicated in their personal and professional lives to their vision. They very seldom play golf when important matters need their attention.

When you go to vote in November, ask yourself if this describes our current administration. Does this party deserves more or less power?

BTW when I am evaluating a company for one of our model portfolios, I look for these characteristics in the CEO.