The earnings reports from "Big Oil" may be getting met with a yawn on Wall Street, but that's no reason to head for the exits.
That's the message from Wasatch Large Cap Value Fund co-manager Mike Shinnick, who joined us from the heartland to share his views. Shinnick is long and loud, by understated Midwestern standards, ConocoPhillips (COP), Devon Energy (DVN), Marathon Oil (MRO) and Exxon Mobil (XOM), the latter of which reported its best earnings since 2008 on Thursday morning.
All of the above have been ramping for the last couple of years, not coincidentally corresponding with ramping prices of crude and other forms of energy. When asked if he's concerned if a drop in crude oil or a corresponding (and seemingly implausible) rally in the U.S. dollar would lead to a meaningful pullback in his energy names, Shinnick is quick to cite organic energy demand as a more meaningful driver of price.
"Energy prices are sustainably higher ... because of global demand," he says. The industrialization of Asia has brought a number of new participants to the world economy who are consuming more energy ... that demand isn't going away."
Shinnick shouldn't be mistaken for a permabull talking his energy book. He also manages a long/short fund in which he was short Exxon until 2009. In contrast ConocoPhillips has been a longer-term holding for the fund manager, who held the name even through the dark days of 2008 and 2009.
For more of Shinnick's thoughts on Big Oil and demand, be sure to watch the video. Let us know what you think in our comment section or at breakoutcrew@yahoo.com.
