40 Years of Oil & Gas Investing Experience Details a 2013 Strategy for More Stable Large-Cap Energy Stocks: Exclusive Interview with Tim Guinness

Wall Street Transcript

67 WALL STREET, New York - November 25, 2012 - The Wall Street Transcript has just published its Oil and Gas Investing Forecast Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Oil & Gas Investing

Companies include: China Petroleum & Chemical Cor (SNP), PetroChina Co. Ltd. (PTR), CNOOC Ltd. (CEO), Valero Energy Corp. (VLO), Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), BP plc (BP), Enersis S.A. (ENI), Total SA (TOT), Helix Energy Solutions Group, (HLX), Peabody Energy Corp. (BTU), Cameco Corp. (CCJ) and many others.

In the following excerpt from the Oil and Gas Investing Forecast Report, an expert portfolio manager discusses the outlook for the sector for investors:

TWST: What are the main funds you manage now?

Mr Guinness: Alongside Will Riley and Dr. Ian Mortimer, I run two energy funds that are long-only funds. One is Guinness Asset Management Global Energy Fund, and the other is the Guinness Atkinson Global Energy Fund. As mentioned, Guinness Atkinson is our brand name in America. Jim Atkinson was our U.S. Managing Director in the 1990s and is now my Partner in that business.

I also run a hedge fund, but that's tiny. I help to run one other fund, called the Global Money Managers Fund. It is a little fund we set up two years ago that invests in the common stock of money managers, and it has done well relatively, although in absolute terms, it is about flat since we launched it. I believe that, down the road, when confidence comes back, it will be a really interesting little fund. It's a specialist financial sector fund investing in an investment area that I am very interested in. I like doing things that I enjoy. I enjoy the energy funds, and I enjoy this little fund.

Talking now about the energy fund, I think energy investment is facing a particularly interesting and potentially attractive 18 to 24 months. The reasons for that are threefold. Three headwinds of the last 15 months are becoming tailwinds.

The first headwind was worrying about the global economy. The U.S. recovery was pretty anemic, the eurozone crisis seemed intractable and China's growth appeared to be waning with worries about the potential effect of the forthcoming changes in the Chinese leadership. Now we can see this headwind is easing. The eurozone crisis is very slowly but very painfully working itself out. The structure of the eurozone has created a banking crisis, which is the heart of the problem now, but the passage of time and policy changes allowing the ECB to support banks is slowly but surely resolving the problem.

Meanwhile, the U.S. looks likely to have a much better 2013 and 2014, and economic recovery is starting to get traction. The collapse of U.S. housing starts in 2008 was really extraordinary, unprecedented in the last 50 years. A collapse over an 18-month period from a rate of about two million new houses a year to fewer than 500,000 has been a huge drag on the U.S. economy. Housing starts are at last recovering. The importance of this cannot be overrated.

Another reason why the recovery has been so slow is because U.S. individuals came into the crisis overborrowed, and they have had to get their borrowing levels down before they could start growing their spending, and so helping the economy to recover. I'm seeing all the signs that this process of deleveraging is well underway, and that's beginning to put a spring in the step of the U.S. consumer. Housing start recovery and successful deleveraging by the individual sector is going to drive the U.S. economy and is going to surprise on the upside.

As regards the China slowdown...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

View Comments (0)