If you’ve taken advantage in the last two weeks to begin accumulating a long-term energy position, as I have previously suggested, we need to get a further understanding about how to manage that position and what I see as the likely timetable for oil and oil stocks. Here’s my latest “trade” report:
China worries and a few quicker indicators that domestic production was beginning to slacken accelerated my timetable for investment that I laid out in my book, “Shale Boom, Shale Bust.” I now believe that the lows in oil have likely been seen, but that does not mean that I believe that oil will become constructively bullish any time soon either.
Why is that? It’s because so many of the signposts for the next boom in oil that I laid out in my book have not materialized as yet – particularly the consolidation movement of shale assets into the hands of larger major oil companies and a few select private equity players.
One other thing I never counted on when I wrote my book was the varied level of corporate accounting ‘tricks’ that even the most overleveraged shale players were capable of – there is a lesson here in the sophistication of modern investment banking, capable of so many ‘life-saving’ restructures that keep them alive.
Halcon Resources (HK) shows an example of this. In their latest restructuring, they have literally forced bondholders almost at the point of a gun to take…