Strong Start To The Year For Energy Versus The Broader Equity Markets
Energy names have continued to show across the board strength from the Majors, to E&P (both the gassy and the oily varieties) to the Oil Service names. This comes with no real push from the commodities themselves. Perhaps oil price resilience is all that's needed at this point to support the group and not further near term strength which would, based on domestic demand and inventories, seem to be unjustified at this time. We're more comfortable with oil retreating into the mid to low $80s than we are with it making a move back to triple digits (again, near term) because as I often say, the hangover for the energy groups, once oil caroms off $100 that first time, will be worse than the party on the way up was great. In short, it will push me to lighten up a bit. Whereas, a gradual move would leave me more content to ride out any 5 to 15% market based retracements. In the ZLT portfolios, year to date performance has been heavily influenced by stout moves in a number of single digit midgets including SSN (which has been running on increased interest in the Niobrara activities of larger participants in the play) and by strength from our core Bakken player holdings. We slightly increased our low exposure to gassier E&P's late last year and those are starting to wake up as well.
Other Stuff: We wrote a couple of short book reports on TPLM this week and added positions in the name twice to the ZLT as a new baby Bakken play. See those posts here under the Jan 11 and Jan 12 news headlines.
Holdings Watch:
Closed trades this past week:
- CXPO – Sold a minor amount of CXPO out of the ZLT, up 31% to my average cost, to rebalance the position and raise a little cash. As I've stated before, this is not one I'm in love with and while it has near term catalysts in front of it the stock has had a better than expected run of late.
- SSN – sold a small amount from the core position to fund entry in another name in the ZLT A portofolio. Sold for $1.75, up 130%.
ZLT A (Taxable Account) Performance:
- YTD 2011 Performance: up 22%. (S&P +2.8%, XLE 3.3%)
- Currently holds 7 positions, essentially fully invested.
- This is an equity only account that does not trade on margin.
- 2010 Performance: up 75%. (S&P +13%, XLE +20%)
- Since Inception (7/1/08); up 78%. (S&P -1%, XLE -20%)
ZLT B (Non-Taxable Account) Performance:
- YTD 2011 Performance: up 18%.
- Currently holds 7 equity positions, essentially fully invested.
- This is an equity only account that does not trade on margin.
- 2010 Performance: up 132%.
- Since Inception (9/1/8); up 608%. (S&P +2%, XLE -5%)
The ZLT C is a four stock, fully invested, small, non-taxable portfolio (two of them actually as they are new ESA's for the interns) and is up 5% since its inception date of 12/29/10.
A few notes on the Zman Long Term (ZLT) portfolio
The portfolios comprising the ZLT contain a total of 20 different energy, primarily E&P, equity positions. I generally like to hold between 15 and 20 names and will be weeding out a few of these positions over the first six months of 2011. Average holding times are in excess of 9 months. Returns are inclusive of transactions fees and dividends are reinvestment. Returns are actual, not modeled, and they are mine as I do not manage money for others.
The Wrap Table:
