OPEC’s positive outlook on the future demand and rising gas production rates suggests that there is a bright long-term oil and gas outlook in the U.S.
The Bakken investment model that I run at Covestor attempts to capture some of the incredible growth and innovative changes occurring throughout the domestic energy industry. It also incorporates some of the companies that practice horizontal drilling and hydraulic fracturing among the shale deposits located in North America.
Following is an abridged explanation of some of the recent investment model changes, starting with stocks added in the past 30 days, then the recently sold ones:
ADDITIONS:
Oct. 4: We picked up shares of HollyFrontier Corp. (HFC) based on the company’s strong business operations. We were seeking to add an oil refining company, but were leery of the traditionally messy profit margins that these business tend to produce. HollyFrontier was selected because its operations are predominantly mid-continent and their margins capitalize on the spread between West Texas intermediate-priced oil and Brent crude prices.
Oct. 1: Hi-Crush Partners (HCLP) was purchased swiftly after the company made its public trading debut in mid-August. Hi-Crush was selected because it handles “frac sand”, which is very highly sought by companies that participate in hydraulic fracturing. We feel that fracking is only going to become more popular in the future, and that its core business will perform well. In addition, we expect Hi-Crush to have a very attractive dividend distribution.
DELETIONS:
Oct. 1: Marathon Oil (MRO) shares were removed from the portfolio due to what we think is lessened growth potential and its overseas operations. We felt that the company had too much international risk, We prefer to seek upside potential from domestic exploration and production companies. MRO does not substantially fit into this category.
Aug. 16: Heckmann (HEK) shares were sold amid poor performance year-to-date, and a lagging performance to other industry benchmarks. We were unimpressed with the company’s most recent earnings conference call and felt there was no pure vision for the future.
The investments discussed are held in client accounts as of September 30, 2012. These investments may or may not be currently held in client accounts.The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or that investment decisions we make in the future will be profitable. Certain of the information contained in this presentation is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. Covestor believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
