00:01:00 @DR87268984 takes the stage for the first time with a functioning iPhone. AR’s one of the good guys, working in the field.
@InvestInOnG got @jim_duffus to admit he wouldn't turn down golf for days like the ones we've just had!
00:15:00 @jleqc is experiencing technical difficulties, but a shoutout to @Josh_Young_1 brings Josh to the stage. Josh is asked to consult his broken crystal ball.
Josh: Data says that those who try to market time end up massively underperforming. The truly rich get big exposure to long-term trends and hold for a long time.
Josh identifies three books about commodity cycles, esp. oil: The Prize, Crude Volatility and The Frackers.
Josh chides purported clairvoyants and is concerned that many on Twitter are pushing a thesis that leads to a low-probability of strong returns.
00:28:30 @thebiglong9 discusses commodity volatility and notes @YellowLabLife's Substack post on iron ore.
H/T to @thebiglong9 for bringing this to our attention. It's an excellent post by the Koala. Highly recommended, and it helps explain why our beloved oil, NG (and yes ... coal) are helped by price volatility.
@YellowLabLife thanks for all you're doing. Would love to have you on a Space to pick your brain!
Josh says swings from $50-$150 in oil will lead to underinvestment.
00:35:00 Josh dinner plot twist!
Volatility is priced as risk, and might keep investors out. In aggregate it works out better, but is painful to go through. Josh thinks the velocity/size of returns from Nov 2020-June 2022 are unlikely to be repeated.
00:49:00 @Nandospage asks about Josh about oil backwardation. Right now, there's no incentive to store oil. Stay safe and cool, Nando!
@jleqc on micro vs. macro. Know what you own, and wait for investments to mature.
@zenmammon how much is price driven by fundamentals vs. "trading"? Deep: Funds flows drive everything. When the market goes risk-off, things will drop.
@IlliniProgrammr look at physical inventories vs. NYMEX contracts. Illini thinks it has been financially driven.
@KramerKarma1 takes the stage! To talk about his recent thread
Kramer then leads us into a discussion of dividends vs. buybacks. @IlliniProgrammr and @InvestInOnG give their thoughts. I invoke @energyburrito. ...
01:09:00 @In_Sapiens gives his perspective as a "credit guy": The combination of a dividend and a buyback compounds nicely. Sapiens says the market values liquidity, and dividends are liquidity. @zenmammon there will be more focus on divvys going forward.
Kramer thinks a 7% divvy is optimal; @HalfbeardCanada thinks 5%-7% is the right amount for #COM stocks. @Nandospage wants to buy up the float before announcing a divvy.
1:23:00 @arodtwi concurs with Nando -- debt-free, buybacks, then divvys. @emmpeethree1 and @WhiteTundraSG take the stage. Shubham points out companies not conducting their buybacks in a competent manner. I, of course, invoke $WHC.
Which leads me to invoke $ARCH. Shubham notes that IPCO has been aggressive about buybacks, and it is nearing its 52W high. "We're back to the Cathie Wood thing." The energy ignorance is getting worse. It'll make the energy crisis worse.
01:36:00 Deep says there's too much power in ESG -- these people aren't going to take their ball and go home. We'll have to see serious suffering in the Western world, first.
Nando isn't seeing much driving in his corner of Europe (Portugal). It's tourist season, so this is odd. One thing he IS seeing: Firewood is sold out (attn: @z_or_zee)
How to stay disciplined. @HalfbeardCanada provides the unnamed laugh of the evening. ...
01:47:30 @timber001 is back, baby! And he's brought @JamesHMackay with him.
The conversation returns to @JamesHMackay's thesis regarding the dangers of options expiry and triple-/quad-witching weeks. James has noted that there are huge dips that provide buying opportunities.
James: If I was the U.S. administration, I would be working with the Saudis to restrain U.S. production and pump KSA production. @timber001 thinks details would leak if it happened. (Editorial note: No way Team Biden would think of this/execute plan properly).
2:03:00 @emmpeethree1 notes $VET hasn't been hammered as much as other stocks. What about MEG after the production hit? James taps out, but suggests shorting ESG funds and carbon credits as two potentially profitable trades.
@devpuck1 talks about buybacks. @timber001 thinks that one or two events (e.g. largecap buyout of a micro) will be needed to spur a cascade effect. @IlliniProgrammr: It'll be easy to pick up 5-6% of a firm, but to get to 51% of a company will get expensive.
Illini thinks #COM could become a group of activist investors. Joe S.: We're trying to talk ourselves into a recession. He didn't see any signs of recession during his global travels. ... Joe discusses $OBE refinancing its debt to get freedom.
Don wants companies to identify the intent behind their buybacks. How much of the float do you want to disappear?
02:26:00 @DSteinmoeller takes the stage. Dave is in this trade for a multiyear bull market.
Dave notes this @chigrl Tweet with comments from U.S. E&Ps.
2:35:00 @ArtVandelay_II takes the stage. Are governments intentionally slowing their economies down because of energy deficits? @IlliniProgrammr thinks the algos can be beaten during market inflection points -- e.g. now.
Deep is defensively postured. He likes how @KramerKarma1 has been trading of late. @IlliniProgrammr talks about having FCF models for your firms to assist in your alignment. Illini calculates that Peabody has an EBITDA yield of 73% based on its recent release.
(Full disclosure: I closed out my $BTU position, putting the proceeds into $CEIX, $WHC, $AMR and $ARCH). I'm 50/50 thermal/met. Deep suggests Illini look at $WHC.
02:52:00 @JoeBeattie11 joins and discusses macro and oil backwardation.
High-Energy Tuesday