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Energy Stocks I'm Buying During The Corona-Oil-War

Mar. 09, 2020 2:49 PM ETEQNR, SHEL, TTE30 Comments


  • I tend towards choosing the unpopular and hated sectors when i find investments worth pursuing.
  • During the throes of the coronavirus mixed with the ongoing oil price war between the major oil powers in the world, one of these sectors has become oil/energy.
  • The companies I'm looking to invest into are Equinor, Royal Dutch Shell and Total S.A.

As an investor, I'm pretty damn underweight oil and energy, compared to most investors. It's because as a whole, I've always been pretty convinced - without any real reason other than a gut feeling - that we're in for an oil correction or drop sooner or later and I was unwilling to allocate too heavy amount of capital in the sector, despite valuations which at the time looked appealing, but which now - for the time being at least - look to have been too expensive.

This means that I do own names I consider quality - such as Royal Dutch Shell (RDS.B), Equinor (EQNR) and also some quality midstream companies like Energy Transfer (ET) and MPLX LP (MPLX). I also own a bit of Enbridge (ENB) and I have a small position in the Pembina Pipeline Corporation (PBA). All great companies, and all companies I like.

However, Oil and Energy currently make up less than 4.5% of my total portfolio. Compare this to Consumer Staples (15%), Industrial Cyclicals (16%) or Finance (18.8%). Even my position in pure Cash (9.8%) is more than twice the size of my stake in oil and energy.

Well, it seems that the market is bringing me a "gift" to change that fact.

The Oil War of 2020

As I'm writing this, Russia has on Friday/over the weekend initiated a price war on oil. This has caused futures of crude now changing hands at below $28/barrel. Banks are already calling the current climate and outlook for oil, to quote Goldman Sachs, "even direr than 2016".

While I try to not write parabolic articles shrouded in doomsday rhetoric, it seems not unlikely that we could see crude prices approach $20/barrel, or even below. It's set to make Oil/Energy one of the least popular investments in the entire market.

This article was written by

Wolf Report profile picture
Leader of iREIT on Alpha
The #1 Service For Safe and Reliable REIT Income

Mid-thirties DGI investor/senior analyst in private portfolio management/wealth management for a select number of clients. Invests in USA, Canada, Germany, Scandinavia, France, UK, BeNeLux. My aim is to only buy undervalued/fairly valued stocks and to be an authority on value investments as well as related topics.

I am a contributor for iREIT on Alpha as well as Dividend Kings here on Seeking Alpha and work as a Senior Research Analyst for Wide Moat Research LLC.

Analyst’s Disclosure: I am/we are long EQNR, RDS.B, ET, MPLX, ENB, PBA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

While this article may sound like financial advice, please observe that the author is not a CFA or in any way licensed to give financial advice. It may be structured as such, but it is not financial advice. Investors are required and expected to do their own due diligence and research prior to any investment. I own the European/Scandinavian tickers (not the ADRs) of all European/Scandinavian companies listed in my articles. Disclosure: I intend to open a position in Total S.A. today, the 9th of March 2020.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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