My latest enterprise resembles the plot of so many Hollywood movies. Get an alpha male to scrape together a ragtag bunch of miscreants (I'm thinking of "The Dirty Dozen" as I write this) and somehow manage to pull off a mission of staggering difficulty. That's what I do in my free time. I create portfolios, and at some point some of those portfolios may even end up in a retail-friendly ETF that you can play on your smartphone brokerage app. More on that later.
For now, I will stick with creating value for investors via the Real Money platform. So, what are the worst of the worst, the losers, the criminals, the guy who has to be forcibly showered (I think that was John Cassavetes in "The Dirty Dozen") and so on? Who are those guys in today's stock market?
Do we even need to ask?
It's energy, baby. Hydrocarbons.
The world is using more than ever in 2021, and let me tell you, my old bones are predicting a cold winter here in the Northeast. As New York state's feckless leadership makes mind-numbing decisions such as the one to decomission the Indian Point nuclear reactor (nuclear is, by definition, carbon-free) and New York City's elders attempt to ban the use of natural gas in newly built buildings (I can hear the radiator whistling as I write this), at least we have the smart people of Wall Street to guide us.
Hahahahahahahhaahhaha! Oh, my God!
I have never seen such a cadre of mindless drones with only one thing on their minds -- ESG! ESG! ESG! (That's environmental, social and governance investing, for the uninformed.)
I can't even open my LinkedIn without some idiotic come-on from some MBA at a gargantuan asset management firm blathering on about the end of the world as we know it. Much like Michael Stipe, though, I actually do feel fine, if a little chilly.
This is where the stake goes in the ground. Hydrocarbons brought billions of people out of poverty on this Big Blue Marble, and at least one billion (mainly in Africa) are still shackled to poverty because they don't have access to the combusted-hydrocarbon power that we take for granted in the West.
Enough I am sick of it.
Planet Earth is 4.5 billion years old. Or, more precisely, the 4.543 billion years that Google tells me when I type in "Earth Age." God knows, humans have done some nasty things to her, but she is not going anywhere -- not least from exposure to easily dissipated gas, of all things. It just doesn't make sense. It is the height of arrogance to think that humans can control the climate. We can't.
Stop! Stop! Stop!
But, hey, here at Delta House we don't get mad, we get even. If mouth-breathing Cathie Wood followers and the dolts at Engine No.1 who are trying to reform Exxon Mobil (XOM) (a long-term, high-returning holding of mine) want to make these hydrocarbon names too cheap for me to resist, guess what? I am not going to resist them.
I created a new Google Sheets document called HOAX (the link is here; it will require my permission for you to view.) Ten equally weighted names and, sorry, Greta, you ain't gonna like any of 'em.
My clients and I have reaped the benefits and high yields of energy names such as Exxon Mobil and Antero Midstream (AM) , but it's time to take off the training wheels. So, HOAX has coal. Yeah, coal. China just commissioned a 1,000-megawatt coal plant (Shanghaimiao) that would be the eighth-largest solar plant in the world by output if it took up the enormous four acres or so that the average solar array does. So, yeah, coal.
The first two names in HOAX are Arch Resources (ARCH) and Peabody Energy (BTU) . Do you hate me yet? Ha.
Next are Suburban Propane Partners (SPH) , which I mentioned in a recent Real Money column, along with the liquefied natural gas valedictorians Cheniere Energy (LNG) and LNG shipper Flex LNG (FLNG) .
That's five, but we need some integrated majors, so I chose Exxon Mobil (surprise,) Chevron (CVX) and Petrobras (PBR) , which is paying out dividends at a stratospheric rate. Call me old-fashioned, but I like real returns.
Finally, you have Portfolio Guru favorite Antero Midstream and, just to ballast things, a preferred stock from an oil tanker company, Tsakos Energy Navigation Series F (TNP/PRF).
Ten names, equally weighted, and we are off to a good start as I locked the initiation date as of last Friday and use those values as bases. This thing is yielding 7.45%. Beat that, Cathie!
My benchmark for HOAX is Cathie Wood's Ark Innovation ETF (ARKK) , which has been a dreadful performer in 2021. Last Thursday's closing prices are the valuation points. The first week is a clear win for the Guru, as ARKK has fallen 5.3% this week while HOAX has risen about 1%. Let's see who is winning on Dec. 30, 2022.
I love this game, and I love taking the other side of the trade from the herd. Join me. This war will never end, but we actually might make a few dollars while we win a few battles.
