{"id":31547,"date":"2015-01-28T07:00:32","date_gmt":"2015-01-28T12:00:32","guid":{"rendered":"http:\/\/www.ino.com\/blog\/?p=31547"},"modified":"2015-01-28T10:32:51","modified_gmt":"2015-01-28T15:32:51","slug":"how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/","title":{"rendered":"How To Manage A Natural Resources Fund When You're Bearish On Natural Resources"},"content":{"rendered":"

\"Adam<\/p>\n


<\/p>\n

I wrote a couple weeks ago about whether we're seeing the end of the oil supercycle<\/a>. In my article, I heavily referenced a money management firm (WHV Investments) that has been bullish on energy investments since predicting a \u201csupercycle\u201d in 2000 (great call at the time!). Despite the massive turmoil since last June, WHV continues to be bullish.<\/p>\n

An oil-bullish money manager <\/h2>\n

To get a flavor for stocks owned by a manager who is bullish on the continuation of the energy supercycle, check out this partial list of WHVIX's stock holdings. Granted, the holdings data are a few weeks old, but WHV tends to have very low turnover and says it\u2019s sticking with its thesis. WHV management believes we\u2019re still in the oil supercycle; accordingly, WHVIX owns stocks like these (as of 12\/31\/2014, source: WHV.com<\/a>; this list represents selected stocks rather than a complete Top 10 list):<\/p>\n

\"WHVIX<\/p>\n

* \u201cBullish signal\u201d refers to whether MarketClub is displaying \u201cgreen triangles\u201d for both the intermediate - and long-term outlook.<\/p>\n

Of the above holdings, WHVIX appears to have (during 4Q 2014) increased its exposure to Suncor, which derives a large plurality of its business from \u201cdownstream\u201d refining and marketing activities. Additionally, Suncor has significant development efforts in Canada\u2019s Athabasca oil sands.<\/p>\n

Note, WHVIX is neither an energy-only nor a natural resources mutual fund. Rather, it's an international equity fund that happens to have adopted a \u201chigh-conviction\u201d oil supercycle thesis that's very heavy on 3 sectors: energy, materials, and industrials. The fund's management believes a major driver of the global economy for many years will continue to be the \u201c2nd industrial revolution,\u201d including massive infrastructure build-out in emerging countries. <\/p>\n

Even after the drubbing of the last 7+ months, WHVIX's assets are still over 70% allocated to those 3 sectors, which amounts to almost 3x the comparable allocation of its primary benchmark, the MSCI EAFE index. The fund \u2013 mercifully \u2013 also has a healthy allocation to consumer staples, as well as a sprinkling of health care stocks\u2026 plus almost 9% in cash.<\/p>\n

In its 4th Quarter 2014 commentary (hot off the presses), WHV managers reaffirmed their view of the oil supercycle, by writing this: <\/p>\n

\u201cOur current sector positioning reflects our view that industrialization, urbanization and infrastructure modernization in the developing world will create demand for energy and materials that global suppliers will be challenged to meet.\u201d<\/p>\n

Management continued in a special \u201cPortfolio Manager\u2019s Letter\u201d to shareholders:<\/p>\n

\u201cThe WHV International Equity team believes that current oil prices are unsustainably low and that stronger demand ahead will once again shine a light on the supply challenges that face the industry.\u201d<\/p>\n

I highlighted WHV\u2019s view of those \u201csupply challenges\u201d in my 1\/14\/2015 article<\/a>.<\/p>\n

An oil-bearish money manager <\/h2>\n

Today, I'll introduce you to a T. Rowe Price natural resource fund manager who says the oil supercycle ended circa April 2011, and that the new secular bear market is likely to last another decade or so. <\/p>\n

Oh, and one other thing about this manager: he\u2019s on record calling for $50 oil when brent crude was trading at about $80 \u2013 even before the pre-Thanksgiving OPEC announcement that accelerated oil\u2019s nosedive (sources: MarketWatch articles by Howard Gold, 11\/14\/2014<\/a> and 1\/27\/2015<\/a>). <\/p>\n

Shawn Driscoll is the relatively new manager of the T. Rowe Price New Era Fund (PRNEX), serving in the role since 9\/30\/2013. By his own admission, Driscoll actually didn\u2019t intend to call for oil prices hitting $50 this quickly. Rather, his \u201ccall\u201d referred to his belief that oil is likely to remain in the $50-70 range for another decade or so. Fortuitously, he happened to publish that analysis in his fund\u2019s semi-annual report dated June 30, 2014. Nice timing, Mr. Driscoll! <\/p>\n

So what does Driscoll believe now? According to Howard Gold's article today, \u201cIf crude falls below $40, Driscoll said, \u2018I don't think we\u2019ll spend a long time there; I think the normal oil price will be around $60-$70.\u2019\u201d<\/p>\n

All right, then. So, if you're managing a fund that invests, by prospectus, in natural resources stocks, and you believe oil prices will stagnate at low levels for the next several years, what do you do? <\/p>\n

Driscoll has positioned his fund as follows (as of 12\/31\/2014):<\/p>\n

\"Shawn<\/p>\n

* \u201cBullish signal\u201d refers to whether MarketClub is displaying \u201cgreen triangles\u201d for both the intermediate- and long-term outlook.<\/p>\n

** PXD doesn\u2019t yet have 2 \u201cgreen triangles,\u201d but check out the chart. It\u2019s starting to look constructive. Also, Driscoll appears to have added to his PXD position during 4Q 2014. Similarly, CXO is looking particularly constructive.<\/p>\n

Driscoll writes in his 9\/30\/2014 commentary: \u201cWe are also looking at commodity-related companies whose input costs are declining while product sales are increasing, including utilities and specialty chemicals.\u201d\u00a0<\/p>\n

What happens after a big oil crash? <\/h2>\n

In my next article, I\u2019ll continue this ongoing look at what\u2019s coming next for energy investments.<\/p>\n

Best,
\nAdam Feik<\/a>
\nINO.com Contributor - Energies<\/p>\n

Disclosure: This contributor does not own any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

I wrote a couple weeks ago about whether we're seeing the end of the oil supercycle. In my article, I heavily referenced a money management firm (WHV Investments) that has been bullish on energy investments since predicting a \u201csupercycle\u201d in 2000 (great call at the time!). Despite the massive turmoil since last June, WHV continues […]<\/p>\n","protected":false},"author":17,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6920],"tags":[6923,7151,28,7148,7149,7079,7153,7152,7150],"class_list":["post-31547","post","type-post","status-publish","format-standard","hentry","category-ino-com-contributors","tag-adam-feik","tag-chemical-stocks","tag-crude-oil","tag-natural-resources","tag-oil-stocks","tag-oil-supercycle","tag-shawn-driscoll","tag-t-rowe-price-new-era-fund-prnex","tag-whvix"],"yoast_head":"\nHow To Manage A Natural Resources Fund When You're Bearish On Natural Resources - INO.com Trader's Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How To Manage A Natural Resources Fund When You're Bearish On Natural Resources - INO.com Trader's Blog\" \/>\n<meta property=\"og:description\" content=\"I wrote a couple weeks ago about whether we're seeing the end of the oil supercycle. In my article, I heavily referenced a money management firm (WHV Investments) that has been bullish on energy investments since predicting a \u201csupercycle\u201d in 2000 (great call at the time!). Despite the massive turmoil since last June, WHV continues […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/\" \/>\n<meta property=\"og:site_name\" content=\"INO.com Trader's Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/inocom\/\" \/>\n<meta property=\"article:published_time\" content=\"2015-01-28T12:00:32+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2015-01-28T15:32:51+00:00\" \/>\n<meta name=\"author\" content=\"Adam Feik\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Adam Feik\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/\"},\"author\":{\"name\":\"Adam Feik\",\"@id\":\"https:\/\/www.ino.com\/blog\/#\/schema\/person\/9651c98dd6f2629f763e85d23af3b50b\"},\"headline\":\"How To Manage A Natural Resources Fund When You're Bearish On Natural Resources\",\"datePublished\":\"2015-01-28T12:00:32+00:00\",\"dateModified\":\"2015-01-28T15:32:51+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/\"},\"wordCount\":860,\"commentCount\":2,\"publisher\":{\"@id\":\"https:\/\/www.ino.com\/blog\/#organization\"},\"keywords\":[\"adam feik\",\"chemical stocks\",\"Crude Oil\",\"natural resources\",\"oil stocks\",\"oil supercycle\",\"Shawn Driscoll\",\"T. Rowe Price New Era Fund (PRNEX)\",\"WHVIX\"],\"articleSection\":[\"INO.com Contributors\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/\",\"url\":\"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/\",\"name\":\"How To Manage A Natural Resources Fund When You're Bearish On Natural Resources - INO.com Trader's Blog\",\"isPartOf\":{\"@id\":\"https:\/\/www.ino.com\/blog\/#website\"},\"datePublished\":\"2015-01-28T12:00:32+00:00\",\"dateModified\":\"2015-01-28T15:32:51+00:00\",\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/\"]}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.ino.com\/blog\/#website\",\"url\":\"https:\/\/www.ino.com\/blog\/\",\"name\":\"INO.com Trader's Blog\",\"description\":\"Expert Charts, Trading Tips and Technical Analysis from INO.com\",\"publisher\":{\"@id\":\"https:\/\/www.ino.com\/blog\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.ino.com\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.ino.com\/blog\/#organization\",\"name\":\"INO.com Trader's Blog\",\"url\":\"https:\/\/www.ino.com\/blog\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.ino.com\/blog\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2018\/12\/inologo-400.jpg\",\"contentUrl\":\"https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2018\/12\/inologo-400.jpg\",\"width\":400,\"height\":472,\"caption\":\"INO.com Trader's Blog\"},\"image\":{\"@id\":\"https:\/\/www.ino.com\/blog\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/inocom\/\",\"https:\/\/www.linkedin.com\/company-beta\/1056449\/\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.ino.com\/blog\/#\/schema\/person\/9651c98dd6f2629f763e85d23af3b50b\",\"name\":\"Adam Feik\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.ino.com\/blog\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/214d09e4705fc60ce211b0f700e81724?s=96&d=identicon&r=pg\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/214d09e4705fc60ce211b0f700e81724?s=96&d=identicon&r=pg\",\"caption\":\"Adam Feik\"},\"url\":\"https:\/\/wwwtest.ino.com\/blog\/author\/adam-feik\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"How To Manage A Natural Resources Fund When You're Bearish On Natural Resources - INO.com Trader's Blog","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/","og_locale":"en_US","og_type":"article","og_title":"How To Manage A Natural Resources Fund When You're Bearish On Natural Resources - INO.com Trader's Blog","og_description":"I wrote a couple weeks ago about whether we're seeing the end of the oil supercycle. In my article, I heavily referenced a money management firm (WHV Investments) that has been bullish on energy investments since predicting a \u201csupercycle\u201d in 2000 (great call at the time!). Despite the massive turmoil since last June, WHV continues […]","og_url":"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/","og_site_name":"INO.com Trader's Blog","article_publisher":"https:\/\/www.facebook.com\/inocom\/","article_published_time":"2015-01-28T12:00:32+00:00","article_modified_time":"2015-01-28T15:32:51+00:00","author":"Adam Feik","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Adam Feik","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/#article","isPartOf":{"@id":"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/"},"author":{"name":"Adam Feik","@id":"https:\/\/www.ino.com\/blog\/#\/schema\/person\/9651c98dd6f2629f763e85d23af3b50b"},"headline":"How To Manage A Natural Resources Fund When You're Bearish On Natural Resources","datePublished":"2015-01-28T12:00:32+00:00","dateModified":"2015-01-28T15:32:51+00:00","mainEntityOfPage":{"@id":"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/"},"wordCount":860,"commentCount":2,"publisher":{"@id":"https:\/\/www.ino.com\/blog\/#organization"},"keywords":["adam feik","chemical stocks","Crude Oil","natural resources","oil stocks","oil supercycle","Shawn Driscoll","T. Rowe Price New Era Fund (PRNEX)","WHVIX"],"articleSection":["INO.com Contributors"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/","url":"https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/","name":"How To Manage A Natural Resources Fund When You're Bearish On Natural Resources - INO.com Trader's Blog","isPartOf":{"@id":"https:\/\/www.ino.com\/blog\/#website"},"datePublished":"2015-01-28T12:00:32+00:00","dateModified":"2015-01-28T15:32:51+00:00","inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.ino.com\/blog\/2015\/01\/how-to-manage-a-natural-resources-fund-when-youre-bearish-on-natural-resources\/"]}]},{"@type":"WebSite","@id":"https:\/\/www.ino.com\/blog\/#website","url":"https:\/\/www.ino.com\/blog\/","name":"INO.com Trader's Blog","description":"Expert Charts, Trading Tips and Technical Analysis from INO.com","publisher":{"@id":"https:\/\/www.ino.com\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.ino.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.ino.com\/blog\/#organization","name":"INO.com Trader's Blog","url":"https:\/\/www.ino.com\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.ino.com\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2018\/12\/inologo-400.jpg","contentUrl":"https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2018\/12\/inologo-400.jpg","width":400,"height":472,"caption":"INO.com Trader's Blog"},"image":{"@id":"https:\/\/www.ino.com\/blog\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/inocom\/","https:\/\/www.linkedin.com\/company-beta\/1056449\/"]},{"@type":"Person","@id":"https:\/\/www.ino.com\/blog\/#\/schema\/person\/9651c98dd6f2629f763e85d23af3b50b","name":"Adam Feik","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.ino.com\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/214d09e4705fc60ce211b0f700e81724?s=96&d=identicon&r=pg","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/214d09e4705fc60ce211b0f700e81724?s=96&d=identicon&r=pg","caption":"Adam Feik"},"url":"https:\/\/wwwtest.ino.com\/blog\/author\/adam-feik\/"}]}},"_links":{"self":[{"href":"https:\/\/wwwtest.ino.com\/blog\/wp-json\/wp\/v2\/posts\/31547"}],"collection":[{"href":"https:\/\/wwwtest.ino.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wwwtest.ino.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wwwtest.ino.com\/blog\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/wwwtest.ino.com\/blog\/wp-json\/wp\/v2\/comments?post=31547"}],"version-history":[{"count":0,"href":"https:\/\/wwwtest.ino.com\/blog\/wp-json\/wp\/v2\/posts\/31547\/revisions"}],"wp:attachment":[{"href":"https:\/\/wwwtest.ino.com\/blog\/wp-json\/wp\/v2\/media?parent=31547"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wwwtest.ino.com\/blog\/wp-json\/wp\/v2\/categories?post=31547"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wwwtest.ino.com\/blog\/wp-json\/wp\/v2\/tags?post=31547"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}