Peter Lynch was quoted in a Barron’s article over the weekend that talked about the legacy of his investments and track record; the book that made Warren Buffet call him to ask to borrow a quote and, in the last paragraph of the story he said “oh yeah, and oil and OFS and NG stocks might triple.”

Ok, Peter. You had me all the way to the last paragraph and to me, this is the greatest gap and opportunity in our industry today (at least from the perspective of the equities). Investors have the ability-unlike any other industry-to evaluate the asset we own, hedge it out for 5 years, calculate the cash flow sources and uses, subtract debt and come up with exactly the residual value at the end of the time period. 

There are 2 things I know having spent my entire career in oil and gas. One: Price is most important. If you don’t want the risk, hedge it away. Two: If you don’t own the right rock, there is nothing you can do about it. 

Good news. The SMOG method helps. You have “perfect information” once a year in the annual report.  Companies don’t want you to look because it’s scary AF but not for everyone.

As for service stocks- they may go up- but with overbuilt capacity in every segment, it’s hard to see how now is the time for an investment dollar.

Merry Xmas.

#hottakeoftheday