Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at http://citywire.co.uk/wealth-manager/article/a746880

How this top US fund is playing the shale boom in 7 stocks

on Apr 17, 2014 at 12:26

Atwood Oceanics

We bought Atwood Oceanics, a small cap offshore contract driller, in August 2011. In addition to the nine units owned at the time of purchase – Atwood was building six new high specification rigs, set to be delivered by 2014.

We felt these new rigs could nearly double the company’s earnings, assuming all are employed at attractive day rates. In this regard, the industry is seeing much higher rates for modern, efficient, high specifications drilling units – such as the ones Atwood had on order. Additionally, as a high quality small cap driller, Atwood is a possible acquisition target in an industry where consolidation has long been a fact of life.

LyondellBasell Industries

One of the world’s largest chemical, plastics and refining companies – LyondellBasell Industries specialises in olefin and polyolefin production.

With most of its operations located in North America, it has a cost advantage due to its ability to use low cost natural gas, as opposed to overseas competitors being forced to use much more oil. Despite low input costs, prices of the company’s ethylene and polyethylene output products are set by the high-cost producers worldwide. Therefore, it enjoys a margin advantage relative to its global peers.

Despite this, it trades at a discount to peers. The company has an investment grade balance sheet and a very cash-rich business model. It has a shareholder friendly business model, which has returned 80% of free cash flow over the last two years in the form of regular and special dividends.

Sign in / register to view full article on one page

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home


As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

Investing for income in a changing environment


With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop

More about this:

Look up the funds

Look up the shares

  • E I du Pont de Nemours and Co
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • Ed Cowart
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet