One overriding theme heading into 2015 has to the investor ramifications of the collapse in oil prices over the last three months.
With oil off by more than 30% during the last quarter, the impact on consumer spending is overwhelmingly positive.
When consumers have $100 to $500 per month in additional spending power, companies in the retail, airlines, travel, restaurants, and vacation sectors will reap the benefits.
Oil dividend
Areas which also could see a lift include health care spending as people are more willing to now go in for long needed medical treatment or procedures.
In my opinion, the major countries of the world which will benefit are the largest consumers of oil: the United States, Canada, China, and India.
On the flip side, the stocks of energy producers and explorers have been hit hard.
In my opinion, you might see consolidation in the oil patch, like the recently announced $35 billion acquisition of Baker Hughes by Halliburton.
There may be plenty more of this kind of activity on the way in my opinion.
Portfolio update
Regarding the Long Term GARP portfolio, Liberty Media (LMCA) held their annual investor day and it was a good learning experience about the company’s outlook.
Starbucks (SBUX) will have their analyst day on Thursday, December 2, 2014, and usually it provides a nice update on the latest plans for the coffee and tea giant.
Finally, I added Biglari Holdings (BH) to the portfolio. It is also a consumer-based holding run by Sardar Biglari.
While controversial, Mr. Biglari is both a proven entity as an investor and operator, and I like the way he is building his company.
In the Concentrated GARP portfolio, I added Vimpelcom (VIP), which is the largest telecom provider in Russia, and many other countries.
Consolidation
Interestingly enough, it has twice as many subscribers as both Verizon (V) and AT&T (T), and sells at a fraction of the price due to the geopolitical issues regarding Russia and the depreciation of the ruble.
As for 2015, in my opinion, investors may possibly see a wave of industry consolidations as the benefits of low interest rates empower aggressive companies with growth ambitions.
Oil is the other big wild card. The longer oil prices stay priced below $80 to $90 per barrel, as they are as of mid-December, the greater the ramifications for the global economy.
DISCLAIMER: The investments discussed are held in client accounts as of November 30, 2014. 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 investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.
