View the article online at http://citywire.co.uk/money/article/a602645
Diary of a Dumb Investor: I'm going to make a fracking killing
I've hit onto a cunning investment idea, but it'll make me a total hypocrite. I'm grateful for my anonymity.
So a bloke in the Jolly Gardeners tells me that America is undergoing an energy revolution – ‘fracking and horizontal drilling’.
Sips his Guinness. Sucks a pork scratching.
‘This means that companies making nitrogen-based fertilisers are quids in…’
‘Whoooaaa, what?’ I interject. Fracking, I’ve read about – beyond that I’m clueless.
Well, some Googling later and I can tell you that nitrogen processing uses lots of natural gas, which has been getting much cheaper as a result of fracking leading to a supply glut. Lower natural gas costs for fertiliser-making companies = ker-ching!
This is good to me. A financial dud I may be, but I’m comfortable in the world of science. Finally, I might be investing in something I can understand (though admittedly, my scientific background is limited to the rather niche study of fungus).
Shrewder investors than me are of course already onto this. Cormac Weldon, a fund manager for Threadneedle, is investing in companies that make nitrogen-based fertilisers. One of them is a US company called Lyondellbasell.
But it remains early days. Fracking is still shiny-new.
So now I’ve freed up some cash, I might have a crack. Or a frack. Maybe stick a cool thou on it.
Of course I’m compromising my environmental credentials here. When I started investing I despised folks who could talk about oil, tobacco and arms companies only in the cold diction of financial abstraction.
But, hiding safely behind my anonymity, I’ll readily admit that profits have begun to come first. Shame on me.
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by Gavin Lumsden on Aug 19, 2016 at 12:28