Very interesting article from FT today. Extracts below.
Hedge fund trader who won big on GameStop backs energy stocks
- Hedge fund trader who won big on GameStop backs energy stocks Senvest Management snaps up shares in unloved oil and gas companies.
- Senvest made on GameStop 2,400% profiting $700mn.
- Oil and gas stocks are on track for further strong gains, as a sector shunned by ethically minded investors regains favour.
- New York-based Senvest Management, 86 per cent gains in 2021 ranked him among the best-performing hedge funds in the world, said he now has a quarter of his portfolio in fossil fuel stocks.
- “The result of the ESG movement is that there’s been massive multiple compression [in oil and gas stocks] and we still haven’t come back from that,” said Mashaal, adding that many oil and gas companies had felt that investment capital “wouldn’t be there for them”.
- “Now there are other countervailing interests, such as the security of energy supply, that have come to the fore and which are not going to go [away] anytime soon,” he said.
- He believes a surge of funding will be needed in the traditional energy sector to correct years of under-investment.
- “You’ve got a couple of years before a meaningful production response can be mounted to satisfy demand. There’s a very solid outlook [for oil and gas stocks] for another year or two,” he said.
- “There’s a lot of room for multiple expansion [in these stocks],” said Mashaal, adding that a high oil price had not been fully factored into these companies’ share prices.
- “People realise this is not going away in the short or medium term. It’s not like ESG goes away, but we [now] need to balance it with energy security and where you want to buy your oil from,” he said.
We spoke to one of our brokers in Norway. We were told Senvest is active in Norwegian energy stocks. Many of the stocks trade at 30-40% CF yield. Plenty of upside in our view.
We are long Aker BP, Var Energi, Africa Oil, Africa Energy and Noble in the energy sector.
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The goal of the blog is to provide investment ideas for further research. I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice. Please do your own research before making any investment action.
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