Wow, a week in the energy world that wasn’t cause for resource fund managers to look through the help wanted adds while working on their tans in the Hamptons. It seems energy companies are not about to go out of business and the sentiment meter on the E&P and Oil Service sectors has ticked up a hair from cliff diver to cautiously optimistic, notwithstanding Friday’s dollar related re-plunge in crude.
Holdings Watch: It pays to be a little quicker on the trigger in this not so sure of itself market.
HK September $30 calls - half sold for $3.10, up 38% in a 24 hour trade
HK September $30 calls - second half sold for $4.70 the next day after an 8 day hold, up 52%
HAL Sept. $45 calls - sold for $2.28, up 43% in 3 days and will repositition soon
I began slowly positioning myself in a few of the Dance List names this week (see below). Click here for the open option positions
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The GMXR Takeout List: Plenty of good names still out there, subscribers send in a comment to get in the running for a free quarter’s subscription.
Options Indicate Something May Be Afoot at Petrohawk. Option activity in (HK) September calls was off the chart Friday with high activity in the $30, $35, and $40 strikes. Despite the drubbing the group and (HK) took on Friday, those options ended up on the day with the $40 strikes up 56% on the bid! Here are the subscribers’ choices for an (HK) suitor:
Weekly Wrap Comments:
Energy stocks had their best week since the second week of May. Though trading volumes in most of our names were light there was increasing evidence that managers or their assistants are increasingly willing to bottom fish this market. The dance list, those names we expect to come back more quickly than the rest in the event of commodity price stability and renewed spinal tissue on Wall Street did in fact slightly outperform the rest of the names. See Dance List updated in Monday’s post.
Rig Counts Continue To Rise. There is some anecdotal though not yet press released evidence that E&P’s are cutting back or at least shifting around their spending for the rest of the year. This is not showing up in the counts where gas directed drilling and horizontal rigs are hitting 20+ year and all time highs on nearly a weekly basis. More good news for the North American centric service companies like (NBR), (UNT), and (NOV) as drilling goes and (HAL) - (which I punted this week as I didn’t like how it has been trading but will re enter lower shortly, (SLB) and (BHI) all of which have been undeservedly punished in recent weeks.
