Petroleum & Resources Corporation is a closed end fund traded on the New York Stock Exchange under the symbol PEO. It has been around a very long time and is managed and administered by the same people who also manage Adams Express (NYSE:ADX). PEO invests in large cap petroleum and natural resource companies, has low operating expenses as well as low turnover.
PEO, as of December 31, 2011, had net assets of $ 732,810,692. it does have a securities lending program for collateral which was 1.7% of assets. It also has a minor program of selling covered calls and collateralized puts. PEO holds the shares in its portfolio a very long time and as of December 31, 2011, had unrealized appreciation of $ 302,253,570.
As of December 31, 2011, PEO was trading at a discount to net asset value of 14.4% and the discount has remained in this general area.
|Market Value in Dollars||Percent of Net Assets|
|Royal Dutch Shell||19,499,169||2.7|
|Freeport McMoran Copper||18,946,850||2.6|
|National Oilwell Varco||16,997,500||2.3|
Performance has been very average over the last ten (10) years, being as follows:
|One Year||Three Years||Five Years||Ten Years|
|Net Asset Value||0.3%||15.4%||3.9%||9.4%|
|Lipper Global Natural Resources||(16.4%)||15.9%||0.7%||11.8%|
|Dow Jones US Oil & Gas||4.1%||13.5%||4.8%||11.6%|
|Dow Jones US Basic Materials||(14.7%)||23.0%||4.0%||7.8%|
|S & P 500 Index||2.1%||14.1%||(0.3%)||2.9%|
Your attention is called to the fact that the gradually increasing discount to net asset value is responsible for the difference in performance of net asset value as opposed to market value.
PEO's largest shareholder is ADX, its sister company, which owns 8.5% of the outstanding shares. I have recently written about ADX and many of my comments are similar. I greatly approve of both closed end funds and highly recommend them.
The ratios for the past five years show low operating expenses and low turnover. They are as follows:
|Percent Operating Expense||Percent Net Investment Income||Percent Portfolio Turnover|
The portfolio is invested primarily in the following eight (8) sectors:
|Percent of Assets|
|Energy Exploration & Production||22.3|
|Integrated Oil & Gas||37.4|
I think PEO is a great investment and a fine way to invest your portfolio in energy and natural resources. It is a conservative, well diversified portfolio. It has been around for a long time and holds its investments a very long time. As with Adams Express, its shareholders are mostly there for the long haul and the shares have been held by several generations of the same families.
PEO is an investment well worthy of your consideration.