Natural Gas - smelly blog

Something really awesome happened this week AND we think it provides a great opportunity!

The news headlines said it all, Toronto Star “Goodbye Summer, hello warm fall”, CBC news “Expect a warmer than normal fall, says Environment Canada, so what did the market do? Well, it listened and acted. Natural gas was the main beneficiary of the negative comments and this past week or so it sold off hard. The chart below shows the price of natural gas over the time period outlined. You can see that recently there has been a material and significant dip in the price of natural gas:.

Source: VIP Wealth Solutions & Bloomberg

So we ask ourselves, should we be fearful or greedy? Hmm…

We suppose it depends on what the macro look is for natural gas, and more importantly whether or not you believe the weather man? We suspect no one really knows for sure, but it presented us with some interesting declines in natural gas stocks. One position we have liked for some time is Trilogy. They have exposure to natural gas and the stock is taking it like it is a bad company. See the recent activity on their stock below:

Source: VIP Wealth Solutions & Bloomberg

The stock has gone from $8.25 down to $7.20. It has started to recover a bit, but the move was awesome. Down 12% in a matter of a few days.

Imagine for a moment if the weather man is wrong. It could happen, it has happened before. If he is wrong and natural gas prices normalise (whatever that means) maybe we revisit $8.25 again and greedy would have been the right answer.

Anyways, Warren Buffet just called and said it is time to be greedy. (Not really, but it would be cool if he did.)

Enjoy the banter and buy them ugly.

 

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