Friday Haymaker: Interview Edition
Special Guest, Marshall Adkins of Raymond James
“In investing, what is comfortable is rarely profitable.” -Robert Arnott
“We saw inventories fall 1.8 million in Q3, using actual data, I think it continues to fall another 800,000 in Q4… We have a big disconnect right now — if you reconnect it, that’s a hundred-plus-dollar oil.“ -Marshall Adkins
The "Atdkins (Energy) Diet: Light on Carbs, Heavy on the Hydrocarbons
Subscribers are in for a treat this week, even those of the non-paying variety. We are sharing a video we recorded during this week’s monthly Haymaker webinar series. It includes some of the best charts and graphs I’ve come across on the energy sector. As we’ve written numerous times this year, it is going through another one of its episodes of being dismissed and even ridiculed.
With apologies to our Founding Members who heard the linked podcast live on Wednesday, we felt this one was important enough to open up to all of our constituents. However, those who are not either Evergreen Gavekal clients or our elite subscribers were not able to participate in the live recording’s Q&A. Viewing this might give you a sense of what you are missing by not being part of this on a regular basis.
This month’s Webinar star was the head of Raymond James’ energy investment banking division, Marshall Adkins. The elderly Haymaker has followed his research and writing for many years and I have come to be an ardent fan of his work. As I state in my introduction to his presentation, Marshall is not only exceedingly thorough in his analysis, he also possesses that rare quality among high-profile financial commentators: courage.
Said quality was vividly on display in this conversation. Despite the present extreme negativity toward energy by most of the investment community, Marshall is boldly taking the other side of the argument. In fact, he made it quite clear that, like Team Haymaker, he views the latest episode of ferocious bearishness as an outstanding time to be a buyer. One of his most compelling points, among many, is that in the past when shorts have been this plentiful (and longs as scarce as the truth at presidential debates) big rallies have consistently occurred. Of course, that’s a point this newsletter has often conveyed and, right now, net-long positioning (i.e., those of a bullish persuasion) is at record lows.
He also opines that despite a world that is in the most fraught condition since WWII, there is virtually no geopolitical risk premium in the price of oil at this time. He clearly believes that is utterly illogical.
Further in sync with the Haymaker view, he’s even more bullish on natural gas than oil, at least on a longer-term basis. You’ll see some powerful visuals on the increasing demand for U.S. natural gas from both booming liquefied natural gas (LNG) exports and the jaw-dropping surge in AI data-center power consumption.
What seems to be escaping the majority of investors presently is that the world’s energy appetite continues to grow, particularly in the emerging world. (By the way, this is even true for coal; new plant construction in developing countries is truly booming.) Yet, as Marshall shows, spending on new oil and gas resources has been — and continues to be — highly deficient. This investment shortfall has been fed by extremely misleading media reports with which Marshall and the moderator of this video (that would be the old guy) are in vehement disagreement.
If Marshall is right, we are on the verge of yet another consensus-shocking rally by energy. Unsurprisingly, that’s a view with which we wholeheartedly concur. Position accordingly!
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Hi! Thanks for posting the vid.
I was wondering, is the slide deck available for download?