Roger Nusbaum submits: This morning in the pre-market I shaved off a little of my Statoil (NYSE:STO) position personally and for clients. I sold different amounts based on when the client bought the stock. The earliest purchases were in the $14's. Those clients sold more than a newer client that owned it at $24 or $19 and a couple of new clients that are only up from $29 did not sell any.
The trade here is primarily about portfolio weight. Just about every energy stock, besides ExxonMobil Corporation (NYSE:XOM), is up a lot. With oil at $75 and, based on what I read and watch, with so many people on the same side of the trade, shaving some off makes sense. If oil keeps going up I will shave a little more off of another name.
To be clear, I am no less bullish on the energy picture. I buy into the idea that demand is growing faster than supply and that oil will stay high. I do not know if it will stay this high however.
After the trade I am still overweight energy, just less so. Hopefully this post conveys a complete lack of emotion on the matter. The energy theme has worked very well -- I don't want to be too long if it ever turns.
The oil companies will make a lot of money if oil averages $60 per barrel. That is not a prediction about price but more conviction in the theme even if the price drops 20%. If that big of a drop in crude happens the stocks' first reaction would be to get smacked. I'm slightly less exposed now if that scenario plays out.