Portfolio, page-179

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29/09/23

19:39

Post #: 70106310
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Originally posted by madamswer: ↑

"I notice you 'only' have about 14% of your portfolio in energy stocks madamswer. Are you happy with that as a percentage of your portfolio? Or is it more a case of not being able to find any other energy stocks that you think are compelling, especially price-wise? Stocks like wds have risen a fair bit. Same as nhc and whc. I don't understand how ooo works so I haven't owned it."

Yes, I agree with you that WDS is no longer fundamentally undervalued, which is why I have been selling (despite my constructive long-term view on oil).

I don't share your view that NHC and WHC are overvalued, though (especially not WHC, which I sense has been sold down hard because of concerns about it acquiring BHP coal assets and having to come to market for equity funding - a view that I see as being of low probability, say 10%).

But I do recognise that NHC and WHC are unlikely to re-rate to a level that I think represents fair value; instead, the investment return is going to have to come from holding them to closure (a sort of a bond with high, but variable, yield to maturity).

Which is not the worst thing because I bought these stocks when this sector was loathed (it may not be loathed today, but it is not exactly loved), so I have a large unrealised CGT liability which I'd be happy to defer indefinitely.

(Not sure if that makes sense, because it is not an overly intuitive approach to investing).

As for OOO, its little more than an oil price look-a-like, expect that during bouts of oil price strength, OOO, which is an oil futures ETF, books profits as the futures contracts roll off, and it distributes those profits as distributions.

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Thanks madamswer I appreciate your answers.
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Portfolio, page-179

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