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The United States Natural Gas Fund Was Up On A Historic Down Day For Energy


  • Yesterday, Monday, March 9th, 2020 was the worst day for oil prices since 1991.
  • It was an even worse day for the energy equity sector, with many energy stocks down over 40%, and even over 50%.
  • On a day when almost all energy equities were negative, natural gas related equities notched some gains, and natural gas prices finished higher too.
  • The reversal in dry natural gas prices across the curve sparked a gain in the United States Natural Gas Fund.
  • This beleaguered ETF is poised to move higher as dry natural gas prices continue their rise.
  • This idea was discussed in more depth with members of my private investing community, The Contrarian. Get started today »

I will go to my grave... believing that really loose monetary policy greatly contributed to the Financial Crisis. There were obviously problems with regulation, but when we had a 1% Fed Funds rate in 2003 after, to me, it was pretty obvious that the economy had turned (up) and I think the economy was growing at 7% to 9% nominal in the fourth quarter of 2003 and that wasn't enough for the Fed. They had this little thing called 'considerable period' on top of the 1% rate just so we would make sure that their meaning was clear. And it was all wrapped around this concept of an insurance cut… I've made some money predicting boom-bust cycles. It's what I do. Sometimes I am right. Sometimes I am wrong, but every bust I had ever seen was proceeded by an asset bubble generally set up by too loose policy..."

- Stanley Druckenmiller

"Try to buy assets at a discount rather than earnings. Earnings can change dramatically in a short time. Usually, assets change slowly. One has to know how much more about a company if one buys earnings."

- Walter Schloss

"A 60:40 allocation to passive long-only equities and bonds has been a great proposition for the last 35 years… We are profoundly worried that this could be a risky allocation over the next 10."- Sanford C. Bernstein & Company Analysts (January 2017)

"Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria."- Sir John Templeton

"Life and investing are long ballgames."

- Julian Robertson

(Source: Author's Photo)


On one of the worst days for the energy sector in modern market history, the United States Natural Gas Fund (NYSEARCA:UNG) finished higher by 5.9%, as natural gas prices rose across the futures

The Contrarian

There is historic opportunity in the investment markets today. I have spent thousands of hours analyzing the markets, looking for the best opportunities, looking to replicate what I have been able to accomplish in the past. From my perspective, the opportunities in targeted out-of-favor equities today are every bit as big as the best opportunities in early 2016, and late 2008/early 2009. For further perspective on these opportunities, consider a membership to The Contrarian, sign up here to join.

This article was written by

KCI Research Ltd. profile picture

KCI Research, aka Travis, has been a financial professional for over 20 years. Formerly a director of research at a mid-sized RIA, and one of four strategic investment decision makers at one of the largest RIA's in the United States, Travis founded his own boutique investment firm in February of 2009. He specializes in against grain investing backed by real-world wisdom and experience by targeting out-of-favor, contrarian investment opportunities.

Travis is the leader of the investment group The Contrarian where he shares premium research and uncovers investment gems hidden in plain sight. Travis shares an all weather portfolio for minimal volatility along with a concentrated best-ideas portfolio Learn More.

Analyst’s Disclosure: I am/we are long UNG, COG, EQT, OXY, AND SLB. 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.

Every investor's situation is different. Positions can change at any time without warning. Please do your own due diligence and consult with your financial advisor, if you have one, before making any investment decisions. The author is not acting in an investment adviser capacity. The author's opinions expressed herein address only select aspects of potential investment in securities of the companies mentioned and cannot be a substitute for comprehensive investment analysis. The author recommends that potential and existing investors conduct thorough investment research of their own, including detailed review of the companies' SEC filings. Any opinions or estimates constitute the author's best judgment as of the date of publication, and are subject to change without notice.

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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Comments (17)

Very interesting article- thank you.
@ KCI Research Ltd.
Your thoughts on this? Fairly large.
KCI Research Ltd. profile picture

This is a vote of confidence, and by and large, most everything has improved for natural gas, and the downtrodden natural gas equities. I like RRC quite a bit, just not as much as AR here, which has much greater insider ownership, and shareholder alignment. Needless to say, I am very bullish on the prospects for these two, and many other natural gas producers, on both an absolute, and relative basis.

Thanks. The size of the purchase caught my eye. That’s a big number.
I wonder if the Russians had this premeditated. They sell a lot of gas. Kill the shale in the US and boost gas prices. Likely.
PT Larry profile picture
Thanks for the article.
Huge 2 day rally in UNG on extraordinary volume.
I guess I might get excited if I bought UNG today. High 40 Low 13. But again I might not. Should have bailed at the mid 30’s.
@KCI Research Ltd. do you have a PT? Or is this a long hold? The expense ratio of 1.28% seems rather high...
J Craig Stamps profile picture
Long UNG 14.5 strikes April 3rd expiry for $30 each yesterday. Meanwhile I got murdered on GASL calls for March 20 expiry. Murdered I tell you 🤓🤓 Never seen an etf trade to $0.12! 😂🤣😂. Thank God I didn't bet the farm!

We broke above a wicked ominous d/t line on UNG with today's action, $2.25 Nat Gas = ~$17.50 UNG, my 1st objective

GL to all!
Kudos Travis, on being the only one to have predicted this.

In the meantime, AR and RRC and AM can’t catch bids.
KCI Research Ltd. profile picture

It is coming, just a delayed fuse right now.

You were correct. 2nd half of the day a mirror image of first half.
Hi Travis. Do you foresee any dividend cut at AM?
cyrus trask profile picture
EQT down 12.25 % today, COG down 5.6%

Back to business as usual
I'd be careful owning very leveraged companies like OXY. Otherwise I agree on the Nat gas price outlook.
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