Sector Stocks Might Have Peaked
Now that energy prices have tumbled from their summer highs, some of the hot money is shifting from bets on commodities to speculative energy stocks.
In just a few months, hedge funds and other big investors have scored huge gains on these shares, and the profits could continue if energy prices rebound strongly. But some analysts are raising yellow flags about these companies because there is no assurance they will succeed in their production and profit goals. Their share prices are so high that they may not go much higher and could tumble, especially if there is another retreat in oil and natural-gas prices.
"It seems people's risk tolerance has gone up in the last month and a half," says George Shiau, who helps run Copia Capital, a $1.2 billion Chicago hedge-fund firm. "The hottest plays lately are company-specific [investments] as opposed to the direction of oil and gas."
THE ENERGY SECTOR: A CHANGING LANDSCAPE
A look at how 18 sectors of the U.S. stock market measured up in 1998, when oil was trading at $11.16 per barrel, and at where those sectors stand today, with oil trading at $59.59.
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Hedge funds and Wall Street trading desks racked up big profits in the past few years on commodities as prices soared on everything from oil and natural gas to copper and zinc. Many of these markets have taken a hit recently, highlighted by a more than 20% drop in oil prices since July and an even larger plunge for natural gas, leading some players to look for profits elsewhere.
They found them, at least for the short term. Shares of Delta Petroleum Corp., for example, a Denver-based driller, shot up 80% in the past five months. The company now has a $1.4 billion market value. Goodrich Petroleum Corp., an exploration company, is up 80% in five months and now has market value just over $1 billion. Parallel Petroleum Corp, a driller, has climbed 20% in a month; its market value is around $800 million.
Some hedge funds are buying up uranium stocks like Cameco Corp., a $12 billion company that is up 35% in the past year, though it has dropped in recent months.
Most investors should be wary of betting on these companies with smaller market capitalizations. "It's a high-octane strategy that may backfire for individual investors," says Jack Ablin, chief investment officer at Harris Private Bank in Chicago, which manages $48 billion. "It's a leveraged bet on energy prices."
Companies drilling for natural gas look attractive now that prices for the fuel have risen somewhat from late-summer lows.
"The small-cap natural-gas names have done the best in the past month," says Garrett Smith, who runs SpinnerHawk Capital Management, a Dallas-based $80 million hedge fund. The recent increase in natural-gas futures to around $8 per million British thermal units from below $5 per million BTUs in late September "takes a bunch of names that don't work and makes them work. But if gas collapses back down, these stocks won't hold up," he says.
The first of two natural-gas wells in eastern Washington in which Delta has a partial interest is expected to be completed in the next few weeks. The other will be completed in the first quarter of next year, according to David Donegan, a Delta vice president. Delta could begin to sell gas from the wells, both operated by EnCana Corp., late next year, Mr. Donegan says.
Drilling in the area is challenging, however, due to a thick cover of volcanic rock, making it harder to use conventional seismic technology. Last week, Delta reported a loss of 13 cents a share for the third quarter, compared with a loss of five cents a share a year earlier. As such, the stock is trading on hopes for big profits down the line. The stock has climbed above $27 on the Nasdaq Stock Market from below $14 in June.
Goodrich, meanwhile, has soared to almost $41 from less than $23 a share on the New York Stock Exchange since late June, as recent drilling tests built hopes that new exploration technology will allow the Houston-based company to extract more natural gas from dozens of prime fields in east Texas.
The new technology enables the company to drill horizontally in addition to straight down, says Richard Moorman, an analyst at Capital One Southcoast, a New Orleans-based brokerage firm that specializes in energy shares. Mr. Moorman, who doesn't own shares of the company, has a "buy" rating on Goodrich.
But horizontal drilling is expensive, and drilling costs are growing, so Goodrich needs natural-gas prices to be high while it ramps up drilling. Some say the stock price already incorporates good news on the fields. Goodrich reported third-quarter net income of 27 cents a share, compared with a loss of 79 cents a share a year earlier. Goodrich trades at 47 times the 88 cents per share that Mr. Moorman expects the company to earn in 2007 and 19 times his estimated earnings for the company in 2008.
Parallel Petroleum, based in Midland, Texas, has attracted interest due to its ownership of wells in the promising Barnett Shale in Texas' Fort Worth Basin. Natural-gas exploration in the area is in the early stage of development, however. Parallel reported third-quarter earnings of 30 cents a share, compared with profit of six cents a share. Its share price has risen to $20.41 on the Nasdaq from a 52-week low of $13.67 about a year earlier. Some production disappointments lately are related to a new partner in the Texas wells. Now, some expect production to climb again.
"Parallel isn't as speculative as some other small-cap explorers because we know they have a good position in the Barnett Shale," says Mr. Shiau of Copia. The firm owns shares of Parallel though it wouldn't say how many.
Other investors are betting on Cameco, the dominant uranium producer. Despite recent production setbacks due to flooding of a key uranium mine project, some investors see Cameco as a way to wager on the continued growth of nuclear power in developing nations like China and India. Strong demand from power utilities and a lack of new production have sent uranium prices soaring in recent years. The stock closed Friday at $33.54 on the New York Stock Exchange, down 79 cents, or 2.3%.
Some investors say they are buying some of the speculative companies, but also adding shares of larger energy outfits, such as ConocoPhillips. The advantage of this approach is that the added risk of the smaller companies may be offset by the safety of the big companies.
小型能源类股成为投资者新宠
随着能源价格从夏季时的高点大幅下跌，部分游资正在从商品市场转战到投机性的能源类股中。
在仅仅几个月的时间内，对冲基金及其它大投资者已经从这类股票中获得了巨大的收益，如果能源价格强劲反弹，这些公司的利润还能进一步增加。但部分分析师开始对它们发出了警告，因为无法确定这些公司的产量和利润目标能否保持下去。这些公司的股价已经非常之高，进一步上涨的空间不大，反而可能出现下跌，尤其是如果油价和天然气价格再度走低的话。
帮助管理Copia Capital的乔治?萧(George Shiau)说，看来人们在这一个半月来的风险承受能力有所增加。最近最热门的投资对象是与油气价格走势相反的某些公司。Copia Capital是芝加哥一家资产12亿美元的对冲基金公司。
在过去几年中，随着石油、天然气、铜和锌等几乎所有商品价格的飙升，对冲基金和华尔街的交易部门从商品交易中获得了丰厚利润。最近，许多市场都出现了回落，尤其是石油价格从7月份以来下跌了20%以上，天然气价格跌幅更大，这令部分投资者开始转向其它领域寻找获利机会。
他们的确发现了一些目标，至少在短期内是如此。比如，位于丹佛的钻井公司Delta Petroleum Corp.的股价在过去5个月中就上涨了80%。该公司的市值目前为14亿美元。勘探公司Goodrich Petroleum Corp.的股价在过去5个月中上涨了80%，目前市值刚刚超过10亿美元。钻井公司Parallel Petroleum Corp的股价在一个月中上涨了20%，目前市值约为8亿美元。
部分对冲基金正在买进铀类股，如Cameco Corp.。该股在过去一年中上涨了35%，目前市值为120亿美元，但最近几个月该股出现了下跌。
大多数投资者应对投资这类市值较小的股票持谨慎态度。Harris Private Bank驻芝加哥的首席投资长杰克?阿伯林(Jack Ablin)说，这是一个比较激进的策略，个人投资者可能会蒙受损失。这要依赖对能源价格的判断。Harris Private Bank管理着480亿美元的资产。
天然气钻探类公司的股价现在颇具吸引力，因为天然气的价格已经较夏季时的低点有所反弹。管理SpinnerHawk Capital Management的加勒特?史密斯(Garrett Smith)说，小型天然气类股在过去一个月中表现最好。SpinnerHawk是位于达拉斯的对冲基金，管理着8,000万美元的资产。他说，最近天然气期货的价格从9月底时的不到5美元/百万BTU上涨到8美元/百万BTU附近，令众多此类股票大幅上扬。但如果天然气价格再度回落，这些股票的价格也会随之下跌。
Delta拥有部分权益的华盛顿东部的两口天然气井中的第一口预计将在今后几周内完井。Delta副总裁大卫?多内甘(David Donegan)说，另一口井将在明年第一季度完井。多内甘称，Delta可能将从明年晚些时候开始出售这两个井所产的天然气。EnCana Corp.负责经营这两口井。
不过，在这一地区钻井难度很大，原因在于上部火山岩层厚度很大，更难以采用常规的地震技术手段。上周，Delta公布第三季度每股亏损0.13美元，去年同期为每股亏损5美分。因此，该公司今后可能获得丰厚利润的预期刺激了Delta股票的交易。该股已经从6月份时的不足14美元攀升至27美元之上。
与此同时，Goodrich已从6月底时的不到23美元涨至41美元左右，最近的钻井试验树立了人们的信心，新的勘探技术有可能使该公司从位于德克萨斯东部的几个主要气田中开采更多的天然气。
Capital One Southcoast的分析师理查德?莫尔曼(Richard Moorman)说，这项新技术将使公司除了垂直钻井外，还能水平钻探。莫尔曼对Goodrich的评级为买进，他不持有这家公司的股票。
但水平钻井投资巨大，钻井成本也在不断攀升，因此Goodrich在增加钻井活动的同时，也需要天然气价格的进一步攀升来配合。部分人士称，该股的股价已经消化了与此有关的利好消息。Goodrich公布第三季度每股收益0.27美元，上年同期则为每股亏损0.79美元。莫尔曼预计该公司2007年的每股收益为0.88美元，Goodrich的股价是这一预期的47倍， 是其对该公司2008年每股收益预期的19倍。
Parallel Petroleum由于拥有得克萨斯州Fort Worth盆地颇具潜力的Barnett Shale地区气井的所有权而受到人们关注。不过，该地区的天然气勘探仍处于开发的初期阶段。Parallel公布第三季度每股收益0.30美元，上年同期的每股收益为6美分。其股价已经从一年前左右的13.67美元的52周低点升至20.41美元。最近产量方面一些令人失望的消息同得克萨斯气井的一家新合作伙伴有关。现在，部分人预计产量会再度增加。
Copia的萧说，Parallel的投机性不象其它一些小型勘探类公司，因为我们清楚该公司在Barnett Shale拥有良好的资产。Copia持有Parallel的股票，但没有透露持有的数量。
还有一些投资者看好铀生产商Cameco。尽管最近一个主要的铀矿项目因洪水导致产量有所下降，但部分分析师认为，投资Cameco是从中国和印度等发展中国家核电站建设项目中获益的途径之一。来自核电站的强劲需求以及缺乏新的产能推动铀价在最近几年大幅上涨。Cameco股票上周五收于33.54美元，下跌了0.79美元。
部分投资者表示，他们正在买进一些具有投机价值的公司股票，但也在增持康菲石油公司(ConocoPhillips)等能源巨头的头寸。这种做法的好处是小公司带来的风险可以被大公司的安全性所抵消。
Gregory Zuckerman
