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Photographer: Ore Huiying\/Bloomberg <\/p>\n Photographer: Ore Huiying\/Bloomberg <\/p>\n
(Bloomberg) — Old West Investment Management went all in on energy stocks when oil was trading around $60 a barrel, Nicol\u00e1s Maduro was still president of Venezuela and the prospect of a Middle East conflict that would send the world into a crisis was still only a distant worst-case scenario.<\/p>\n
By the end of February, even before the Iran war sent energy prices soaring, the wager had driven the firm\u2019s flagship fund to a 31% return this year \u2014 \u00a0just not entirely for the reasons that its chief investment officer expected.<\/p>\n
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\u201cI don\u2019t know if we were lucky in it or just that these types of events highlight the importance of those types of scarce resources,\u201d said Brian Laks, the CIO of Old West, which oversees about $1 billion of investments.<\/p>\n
Old West\u2019s decision to increase its energy-stock exposure from the single digits to over 30% of its holdings stemmed from a call that looked far more predictable. Many in the industry had been expecting oil prices to drop as new supplies hit the market and slowing growth curbed demand. When that didn\u2019t happen, it appeared the sector\u2019s stocks were poised to rally back from a lagging run.<\/p>\n
That\u2019s exactly what happened as Trump administration\u2019s capture of Maduro, its hardline approach toward Iran and the impacts of Russian sanctions pushed oil prices higher. Then prices surged anew this month after the US and Israel started bombing Iran, miring the region in an escalating conflict that\u2019s shuttered a key shipping lane and pushed oil to over $110 a barrel. <\/p>\n
\u201cIt\u2019s an interesting problem to have: we make this big rotation into an area, and within the first one to two months, a lot of the stocks are up 30% to 50%,\u201d Laks added. \u201cFor the most part, that\u2019s what people usually look for as a great return for the total lifespan of an investment.\u201d<\/p>\n
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The decision has catapulted the small Los Angeles hedge fund to returns that have eclipsed some of its bigger and better-known peers.<\/p>\n
It outpaced oil-trader Pierre Andurand\u2019s main hedge fund, which gained 19% through March 13, as well as RCMA Capital\u2019s Merchant Commodity Fund, which returned around 20% through March 6. Old West also overshadowed major multi-strategy funds like Citadel\u2019s Wellington, which had a 2.9% return through Feb. 28, and Balyasny Asset Management\u2019s Atlas Enhanced fund, which was up 0.4%.<\/p>\n
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Old West\u2019s wager rested on expectations that \u2014 geopolitics aside \u2014 the industry would rebound from a run of significant underperformance over the past three years. The S&P 500 Energy Index rose just over 2% in the years 2023 through 2025, compared to a 78% gain in the S&P 500 Index.<\/p>\n
\u201cThe sentiment had gotten too extreme and it was not matching up with the longer-term fundamentals,\u201d Laks said. \u201cSure you may have had some oversupply projected this year, but we thought the longer-term outlook was much stronger relative to where the stocks and the commodity prices were trading.\u201d<\/p>\n
At the same time, the firm pared its investments in equities like precious metal miners that had already seen large increases. Old West also saw gains last year from critical minerals and magnet companies that surged after the US government took stakes in them.<\/p>\n
The price of gold has since retreated from its January peak and has tumbled over the last eight trading days amid speculation that major central banks will start raising interest rates to keep oil prices from delivering an inflationary shock.<\/p>\n
\u201cWe did catch a little bit of questions about, \u2018why are you guys selling things that are working\u2019 and \u2018why are you buying energy, no one wants oil,\u2019\u201d Laks said. \u201cA couple months goes by and they\u2019re not questioning us as loudly anymore.\u201d<\/p>\n
Old West holds energy stocks like Canadian Natural Resources Ltd., Murphy Oil Corp., Suncor Energy Inc., SLB Ltd. and PBF Energy Inc.<\/p>\n
Laks said he sees room for continued upside, citing still-low valuations. Moreover, he expects electricity-hungry artificial-intelligence data centers to keep increasing demand for natural gas regardless of how the war shakes out.<\/p>\n
\u201cWe\u2019re looking at what are the areas that might benefit from having AI. We keep coming back to the physical infrastructure, the railroads, the pipelines, the oil wells,\u201d Laks said. \u201cEven though we\u2019ve had this nice run, I think the long-term outlook for energy is very strong. I don\u2019t think we\u2019re getting rid of oil anytime soon.\u201d<\/p>\n
–With assistance from Hema Parmar.<\/p>\n
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\u00a92026 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"Photographer: Ore Huiying\/Bloomberg (Bloomberg) — Old West Investment Management went all in on energy stocks when oil was…\n","protected":false},"author":2,"featured_media":351327,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[1877,170898,114,85,46,157540,18414,6807,170899],"class_list":["post-351326","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-bloomberg","tag-brian-laks","tag-business","tag-il","tag-israel","tag-middle-east-conflict","tag-nicolas-maduro","tag-oil-prices","tag-old-west"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/351326","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=351326"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/351326\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/351327"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=351326"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=351326"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=351326"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}