Posts tagged ‘natural gas’

Feb 18

Terra Energy as a bet on gas

I remember back in 2009 when I had a broker recommend Terra Energy (TT) to me. He thought it was a great play on an improving economy and what was known to be infinite demand for natural gas.

I didn’t quite see it that way and I passed on the opportunity. Soon after that I passed on the broker. AECO gas prices were well above $5/mcf at the time (I wouldn’t be surprised if the number was closer to $7 or $8) and I figured there was no way gas prices could stay up there. The stock was at around $1.50.

Fast forward a few years and I bought the stock about a month ago between 28-30c. As usual I am slow getting around to a write-up and unfortunately the price has increased somewhat in that time. Nevertheless, even at the current price I think Terra represents a good risk/reward with the main element of that risk/reward being the future price of natural gas. Read more

Oct 1

Week 65: Doing the work

Portfolio Performance

The turn in housing

– Michael Burry – Scion Capital

The housing market has turned.

Being that it is a huge, lumbering tanker, it takes a long time to slow down and redirect. The changes happen slowly enough that you can miss them if you are focused on the wrong details (price increases and to a lessor degree sales increases) and not enough on the right one’s (inventory). All that matters is that prices are cheap, rates are low, and inventory has come down to levels that leave many cities firmly entrenched as sellers markets. Once buyers stop seeing themselves in the drivers seat, their attitude changes from one of waiting for a better buy to that of getting in before its too late. The vicious circle is replaced by a virtuous one, and sales and price increases will follow. Nothing lasts forever, and the US housing collapse didn’t either.

Falling inventories had to lead the housing turnaround, and that is what we are seeing now. Nationwide in August housing inventories fell from 8.2 months of supply a year ago to 6.1 last month.