The Straight Talk Blog

From time to time, we intend to make postings to our Straight Talk Blog when we have something important to say. All three partners will be contributing authors. We'll alert you by e-mail when we make a new posting.
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Best regards,
Rob, Rupel and Richard

 

November 2014

Oil and That Slippery Slope
Nov 28, 2014 4:09 PM
Heathbridge Capital Management

We are all aware that in the last two days, the price of oil has had an historic collapse, dropping over 10 percent in two trading sessions. There has been a considerable impact on oil and gas shares, and shares of companies deemed to be related – including railroads (which we have been watching but don’t own).

You have about a 4 percent weighting in one oil stock – Suncor – which dropped 8 percent in two days and at least one gas stock, Nuvista, which dropped 15 percent in the same time frame.  Your total weighting in these stocks is about 6 percent, compared to the index weighting of about 19 percent.

Even though the market seems to be betting on further declines, we will not sell into the torrent. Our next activity will  likely be on the buy side if it looks like the market is entering a stage of manic panic. The drop in oil prices actually triggered price gains in sectors of the market deemed to benefit from lower energy prices. Magna rose, as did our investment in japan (Mitsubishi UFJ). So while the energy part of your portfolio  is likely to decline for a while, the oil price collapse  will not be of itself a major impairment to your total portfolio value and may well be the source of our next opportunity.

All in all, the price movements of the past two days have vindicated our diversification strategies.

If you have any questions, please don’t hesitate to call. We will look forward to seeing many of you at our Seasonal Celebration on Monday night.

The Team at Heathbridge