I've always preferred investing in businesses with established cash flows or assets that I feel I can value with a reasonable level of accuracy. The goal from this approach is to limit my investments to companies that I feel I can value, and then only buy shares when they are trading at a significant discount to that value.

Done successfully, this should be a fairly low risk and rewarding manner of investing.

The truth is however that aside from Warren Buffett, any list of the world's richest people generally doesn't include very many "value" investors.

Instead the richest people in the world made their fortune by getting in early on what ended up being a massive investment opportunity. I wouldn't mind getting in on some of that.

I keep a small segment of my portfolio set aside to invest in what I think could be investments that turn into huge

The best cure for low natural gas prices is supposed to be low natural gas prices. I still think that is true, but I certainly had no idea that a cure could take this long.

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Natural gas prices started hitting the skids in 2008 when surging shale gas production in the United States met up with the global financial crisis. It was a perfect recipe for a commodity price collapse.

A collapse that we are still waiting for a recovery from.

Back in June of 2012 with natural gas prices under $3 per mcf, Exxon Mobil's (XOM) CEO finally stopped sugarcoating the issue and said what everyone else already knew:

What I can tell you is the cost to supply is not $2.50. We are all losing our shirts today. You know, we're making no money. It's all in the red.

Since then natural gas prices,

I'm a big fan of North American unconventional resource producers. There are several things that I like about these companies:

1) The companies developing these unconventional plays sit on huge amounts of oil in the ground. Even with current technologies, which have cracked the code on these plays only small amounts of the oil in the ground is recoverable. Over time I believe technology is going to allow for a lot more of that oil to be recovered which means the land these companies sit on is only going to increase in value.

2) There is no exploration risk being taken by these unconventional resource players. These companies know where the oil is and how to get it out. These companies are operating more like manufacturing companies than oil and gas explorers.

3) These companies operate in North America where (for the most part) the companies don't have to worry

I've gotten very heavily invested in unconventional North American (mostly Canadian) oil resource play companies. My portfolio is stuffed full of them. As a result, I am very interested in where the price of oil is headed.

The No. 1 threat to the price of oil remaining high is, strangely enough, the rapid rate of production growth from the very companies I own. Energy companies killed the price of natural gas in North America with the shale gas revolution. Can they do the same to the price of oil?

My belief is that they won't.

I believe North American oil growth is going to continue, but that the pace of growth peaked in 2012 and is going to slow considerably with each passing year. That slowing rate of growth is not going to be enough to offset demand growth elsewhere in the world. I base this belief on two

What a difference a decade makes. Back at the turn of the century the technology giants were the ONLY companies that investors wanted to own. These companies sported Price to Earnings ratios that implied that they would grow at high rates for decades to come.

Fast forward to today and these same companies are now the slow growth behemoths that put investors to sleep. Price to earnings ratios that were once sky high are now below the valuation multiples assigned to average companies.

Most of these companies (excluding Apple) lost any investor hopes of a return to growth years ago. Microsoft (MSFT) is the poster boy for this as the stock price has gone perfectly sideways for more than ten years:

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While the titans of technology aren't as in favor as they once were, there is no dispute the financial clout of this group of companies.

Consider

This week Suncor (SU) made some existing shareholders very happy when it announced the following:

Strategy Update

Capital discipline is a key enabler of Suncor's strategy. The company allocates its capital according to a clear set of priorities. It is committed to ensuring sustainable and reliable operations, investing in profitable growth and delivering strong returns to shareholders through dividends and share repurchases. Suncor continued to return cash to shareholders through dividends per common share of $0.13 and share repurchases of $405 million in the first quarter of 2013.

Aligned with the company's strategic objectives and the strength of its business model to deliver consistent and improving financial results, subsequent to the quarter, Suncor's Board of Directors approved a 54% increase to the company's quarterly dividend to $0.20 per common share beginning in the second quarter of 2013. The company also received regulatory approval to purchase for cancellation up to

Back in the summer of 2010 I listened to a Chesapeake Energy (CHK) conference call where then CEO Aubrey McClendon laid out what he thought Chesapeake's various properties were worth.

While those estimates seemed to hold up through the McClendon era joint venture transactions, the numbers are now looking out of touch with reality.

With McClendon now gone from his post as Chesapeake CEO, having been politely shown the door following a shareholder revolt, the company has had a change of strategy.

The new strategy seems to involve reducing debt by selling off assets as quickly as possible.

I think the strategy is the right one (maybe the only one), but I have been surprised at the prices Chesapeake has been receiving in its asset sales. The valuations certainly don't match up with McClendon's estimates in 2010.

The last two asset sales in particular have to be catching shareholders

There were quite a few disappointed people who found out earlier this week that TransCanada (TRP) now thinks that the Keystone XL, which had been expected to be in service in 2014 is now likely to slip into late 2015.

The official update from TransCanada on the Keystone XL was as follows:

On March 1, 2013, the DOS released its Draft Supplemental Environmental Impact Statement for the Keystone XL Pipeline. The impact statement reaffirmed that construction of the proposed pipeline from the U.S./Canada border in Montana to Steele City, Nebraska would not result in any significant impact to the environment. The DOS is in the process of reviewing comments on the impact statement that it received during a 45 day public comment period that ended on April 22, 2013. Once the DOS has completed its review, it is anticipated that it will issue a Final Supplemental Environmental Impact Statement

One thing that I've learned, and luckily not learned the hard way is that short sellers need to be paid attention to.

If a stock has a huge short interest I'm apt to avoid it.

The reason is that I think more often than not, these short sellers are the "smartest money". They have to be, because they have a lot more to lose.

If I make a terrible investment and a stock I own goes to zero I lose 100% of what I've invested. If a short seller makes a terrible investment decision the stock he or she has shorted can go up five or ten times and the short seller has a loss of 500% to 1000% of the initial amount involved.

You would think that Apple (APPL) is one company that a short seller would love.

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Anyone short the company has made a lot

A few weeks back, I wrote an article about three companies that were trading for close to the cash on their balance sheets AND had potential for huge upside if everything went right.

I wasn't so much looking for the huge upside (which I would love), rather I was focused on the combination of the potential for a big winner along with significant downside protection that exists because of the cash supporting the valuation.

One of the companies I looked at was MGT Capital Investments (MGT).

At the time of my article, MGT Capital's share price was $2.91, and the cash on MGT's balance sheet was nearly equal to that.

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The potential for big upside that I saw in MGT is related to the ownership of an intellectual property.

That intellectual property relates to a new breed of slot machines that allow players to compete against

By now pretty much everyone is familiar with the booming Texas unconventional oil play called the Eagle Ford.

But only two years ago, it was hardly known to people who don't closely follow the energy industry.

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From basically no production at the beginning of 2010, production in the Eagle Ford has exploded upwards and is now pushing 700,000 barrels per day. EOG Resources (EOG) captures this phenomenon in the graph above.

The Eagle Ford and the Bakken ARE the American unconventional oil revolution. All of the other unconventional plays are rounding errors next to these two big boys.

These two plays alone have changed the global oil markets and given North America a big competitive advantage through lower oil prices.

Canada has its own version of the Bakken where innovative young companies like Crescent Point Energy (CSCTF.PK) and Petrobakken (PBKEF.PK) have led production growth.

Canada may also

I've assembled a portfolio focused on unconventional tight oil producers that sit on billions of barrels of oil in the ground. I have focused on these types of companies for two reasons:

1) I believe that we are going to have oil prices of at least $80 on average for the next 25 years.

2) More and more of the vast amounts of oil in the ground that these unconventional producers sit on is going to become recoverable over time as oil prices rise, and technologies/techniques improve. That means current reserve figures for these companies likely greatly underestimate the true value of the oil they control

I've been quite happy with where the price of oil has been over the past three years, as the price has not dipped below $80 per barrel for anything longer than a blink of an eye:

Last month I wrote an article in

I've had a significant percentage of my portfolio invested in light oil producers for the past several years. I intend to keep it that way for the next ten years unless we have a giant spike in oil and get some opportunities to lock in some very nice prices.

The recent rapid drop in oil prices has (as usual) forced me to revisit my bullish oil thesis and see if I still believe in it for the long term.

In my efforts to revisit my thesis one of the first items I found was what some of the people (service company Core Laboratories) involved in drilling unconventional tight oil wells are saying. Core Labs confirmed what I have been hearing consistently from the industry for the past couple of years, which is that the North American oil boom is going to require $90 plus oil prices to continue.

That

The single most important item that is going to determine whether or not my portfolio does well is the price of oil. I've built my portfolio to benefit from what I believe will be a future of high oil prices.

I therefore enjoy weeks where oil drops by $10 a little less than most people.

By high oil prices I mean $80 plus, so I'm very comfortable with where oil has been for the past couple of years.

What I find hard to believe is how comfortable the general public now is with $80 oil. Thirteen years ago, the thought of $50 oil would have had people screaming about a financial crash caused by an oil shock.

The prospect of $80 oil would have seem outlandish and a catastrophe.

Will Oil Prices Stay Elevated?

The single biggest threat to my portfolio is, strangely enough, the very companies that my portfolio

I'm an infrequent investor. I try and buy shares in a company I like, with management I like, at a price that I like and then sit back and wait. If my entry price is attractive and the management team is good then I don't need to do much else.

One of my favorite quotes is this one from Jesse Livermore:

"After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: it never was my thinking that made the big money for me. It was always my sitting"

That sounds good to me, I'm a much better sitter than a thinker.

Because I seldom buy or sell anything I end up spending quite a bit of time reading. This week I found myself reading an interview with one of my favorite investors, hedge fund manager Monish Pabrai.

The

The oil and gas business is a cyclical one, there is no doubt about that. The long-term trend may be one way or another, but even within a long-term trend there are lots of ups and downs.

This has to be a business where a contrarian is very well equipped to succeed. A contrarian would be buying assets at the bottom of the cycle and selling them at the top.

I don't think there is much doubt about where natural gas is in its cycle. And it isn't near a top. We have been bouncing along a bottom for five years.

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Prices have been in the tank for the last five years as the unconventional gas boom has kept the North American market in a state of oversupply. Forced drilling to hold leases has kept a lid on a chance for a recovery.

There does however appear

If you follow the financial markets fairly closely, you are subjected to an endless number of predictions every day of the week. Those predictions are about (among other things) where the stock market is going, where commodity prices are going and which specific companies to buy.

After awhile, you learn which voices you should ignore and which ones you should pay attention to. One voice that has a history for making accurate predictions is GMO's Jeremy Grantham.

Grantham famously warned investors to avoid assets exposed to the Japanese bubbles (equity and real estate) of the late 80s, the growth stock bubble of the late 90s and the debt bubble in 2008.

So my ears perked up this week when I learned that Grantham said that investors should get exposure to natural gas. Grantham is a numbers driven investor. If he is willing to issue an opinion, it is based

When is it a good idea to not listen to what Warren Buffett is advising you to do?

I think the answer might be never.

Do you remember Buffett's October 16, 2008 op-ed in the New York Times advising investors to invest in American stocks?

THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So ... I've been buying American stocks. This is my personal account I'm talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent

Oil production in the United States came into 2012 at 5.8 million barrels per day and is now (unbelievably) at 7.15 million barrels per day.

There have been really only two unconventional oil fields that have driven this increase.

The Bakken in North Dakota:

And then the Eagle Ford in Texas:

Independent producers like EOG Resources (EOG), Chesapeake Energy (CHK) and Continental Resources (CLR) having been leading the charge and growing oil production very quickly.

I Don't Believe Recent Growth Is Repeatable

I'm going to go out on a limb here and say that while American (and Canadian) oil production growth is going to continue for a long time, the surge experienced in 2012 is not repeatable south of the border.

Why?

For two reasons.

One is that the big increase in rigs that moved from natural gas to oil in 2012 creates a one-time surge.

Two is that

I'm not 100% sure where I sit when it comes to the role of an activist like Carl Icahn in the stock market.

I believe fully that the management of a publicly traded company should be held accountable to shareholders, and I really appreciate when activists step forward and force that accountability.

What makes me a little uncomfortable with someone like Icahn is that at no point in time does he really want to be a long term investor in a company. His operating method involves targeting an underperforming company and enacting change so that he can realize a short term profit.

I often agree with the changes that Icahn proposes and his targets are often well deserved recipients of his negative attention, but it worries me a bit that some of his requests may be for his interest in a short term profit and not for the long term