Energy stock rankings (Oct 2014)

I find that ranking stocks is a useful analytical tool.  Ranking stocks against each other helps me be more realistic about how good or how bad a stock is.

I have some extreme and unconventional viewpoints.  Many “value investors” would have a list that would be the opposite of mine.  Many of the stocks I have shorted have been mentioned on ValueInvestorsClub.com as longs or potential longs.  Many of these people are quite intelligent and eloquent.  In my opinion, the longs do not understand how they are being bamboozled and misled by stock promoters.  I’ve written about this many times on this blog (e.g. “How would a sociopath fleece investors in oil and gas?” and “Beating Wall Street in oil and gas“).

While the independent E&P sector has seen a meltdown in share prices, I don’t see undervaluation.  The problem is that many of the companies continue to be run by stock promoters and charlatans (more so in the small caps than the large caps).  Until the management teams get better, I don’t think that the independent E&P space will be a good place to look for longs.  My prediction is that there will be more pain to come when NGL prices collapse.

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Short selling update July 2014

So far I have shorted the common shares of more than 80 stocks this year.  On common shares, I have been profitable overall despite a rising market.  Unfortunately, losses on put options (mainly YONG) have more than wiped out the gains on my common stock shorts.

I think that I’ve gotten fairly good at spotting bad stocks.  My CAPS account is a reflection of that.  (*CAPS does not consider the mechanics of borrowing shares.  It’s unrealistic.)  Unfortunately, I’ve been losing money on put options this year.  Part of this may be because I mainly short small cap stocks which are too illiquid to buy put options on.  As well, many of my shorts are volatile so the put options would be neither cheap or attractive.

See below for commentary on certain positions.  Keep in mind that due to the sheer number of positions, my research on short positions is typically very shallow.