YouSaid · the spoken record

Josh Young

lines on the record: 98
first: 2022-05-30
most recent: 2022-05-30
sittings or episodes: 1
sources: podcast

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“I think there isn't the thing that's in common maybe among our holdings is the very low valuations, but we're exposed to sort of different situations. And some of the shares we've been buying recently have material hedgering in place. And again, we just treat it as a liability, understand what the situation is, understand their strategy, and as those hedges unwind or as the companies grow additional production or as they lock in additional production as they hedge it, but at much higher price levels, there's room for them to generate substantial cash flow. And so I think it's not anything at a price, but it's many things at the right price as a sort of approach.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Liabilities like they are in the current price environment and as a potential asset if prices were to fall materially from here. And so I think it just depended on the company and on the situation specifically. Again, when we talked about what bison is and like how we do it, one reason we've been able to survive since we launched in 2015 despite the first five plus years being an oil and gas bear market was by taking a special situations approach and owning individual securities with individual theses, not just having real estate or some other stuff that the market wasn't giving credit to, but having a number of different aspects that were different in each of the different investments that helped provide a margin of safety and help provide different sort of valuation unlock potential on the upside, multiple different catalysts.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“So I own companies that have oil or gas price hedges, and I own ones that don't. And obviously the ones that don't have hedges do better in a price environment where the price is rising or has risen a lot relative to prior periods. And so it's a little easier to own those companies in that sort of rising price environment, but it's also more risky. And so I've needed to be very careful to own ones that are transforming their businesses like we described with Sandridge, where Sandridge doesn't have hedges either. They really transform sort of what their break-even costs look like. They transform their balance sheet. And so I think there is some safety in that sort of operational and sort of cost structure transformation that provides some of the downside protection that other companies have from hedges. I just treat the hedges as”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Prices, it's still actually more cost competitive. So I think the demand is pretty strong from emerging markets and it should hopefully continue because that's indicative of improving quality of life for hundreds of millions or billions of people. And really if we're caring about the world and caring about people, that's where the greatest good can get done is through those people getting access to basic healthcare and getting access to basic transportation that we just treat as a given.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Care, and when you extrapolate that out onto what is it 1.2, 1.4 billion people of whom a very small percentage currently use any gasoline or any diesel, there's just, we saw this in China already. In China, they still use a fraction per person of the oil that we use in America and Europe and elsewhere. And so as we see these inflections, there's really a lot of room up in demand. And then it's just a question of how much of that gets met through actual supply, how much of that gets priced out through higher prices. And then there are alternatives. And with lithium prices doing what they've done and various other inputs for batteries and other costs, electric vehicles and the like are actually less attractive substitutes than just using internal combustion engines and paying even at $200 oil relative to current lithium prices and cobalt and other.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Inflecting economies which fortunately India is seeing right now and certain other emerging markets have been seeing, you see energy consumption rise a lot, including oil consumption. And so I think we could see oil demand much higher than current levels. And if it doesn't get there, it might be because of scarcity of supply, and that might just mean much, much higher prices. And the reality is that if you're a farmer in India and you can go buy a scooter or some other sort of low gas consuming internal combustion engine vehicle to bring your product to market yourself, your returns on that might be ultra high and it might not matter so much if you're buying a $500 scooter or whatever if your gasoline is $5 a gallon or $20 a gallon, the return on use of it might be so high that you don't necessarily”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“I don't know. I mean, I think it's a really good question. It does appear that so far we've been growing oil demand by about 1% per year on a global basis. And that seems to be one of those almost immutable sort of trajectories. And it seems that when you get to a”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Josh, when do you think the world obviously knows possible? No. When do you think the world will hit peak oil demand? I think you mentioned an investor who speculated that we had already reached it. I think that's been proven to not be accurate. But when do you think that the world will reach peak oil demand?”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Analogy If you look at what happened with whale oil prices, whale oil was quite richly priced as it phased out. And so in a phase out sort of scenario were that to happen if it were not instantaneous, you know, maybe there are significant profits in the business also. So I guess we'll see. But so far as I see various people buying beachfront property on islands that have very low elevations or various places that are just very subject to the risks that they are making lots of money warning others about while flying to those conferences on private jets. I'll just not treat that quite as seriously as a risk and address other real risks that are more tangible and more likely.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“It doesn't seem like that big a deal. And I guess the one other aspect to that is if you look at the countries that have gone furthest along that sort of spectrum and they're European countries and you look at what they were trying to do and then what they're doing right now, in many cases they're turning on coal power plants, which are sort of the most emitting from a carbon perspective. And so, you know, that, I think, is a signal of the direction. I think I heard someone say that it's hard to know when we're going to have peak oil if we haven't even peaked coal. And so let's look at coal and let's see when coal consumption peaks and starts to fall off and maybe that'll be an indicator of when oil might start in the meantime my company is at two times cash flow should do just fine. And if anything, if you look at Kathy Wood and others were out with this sort of whale oil.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“I think the messenger often signals the message. And in this case, the messengers are signaling that there is money to be made in delivering that message, but they are not through their actions signaling that as a real risk. So again, it's like, you know, you can say, hey, this guy who's been right on four stocks likes Pantheon, therefore I should buy Pantheon. Okay, cool, or you can like go meet the geologists that you know who like to speculate on oil and gas stocks where there's exploration and none of them own Pantheon. So, you know, you can filter a little. And so I think with filtering a little for this, that doesn't really hold up, I think, as such a big risk. And then particularly of the companies that I own where I own them at very, very low cash flow multiples, at very high free cash flow yields, it just doesn't seem”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so owning companies at two times cash flow makes that much less of a concern to me and for my portfolio. But I think it's interesting because the people that came up with that have bought beachfront homes recently that they fly to in their private jets while they consume various kinds of carbon emitting hydrocarbons at way above the average rate for humanity and for people in their countries. And so I think it's an interesting concept. And when those people sell their beachfront homes because they're worried about rising waters and when they stop using their private jets because they're worried about some sort of carbon ceiling actually happening, you know, I think I'll take that a little more seriously. But in the meantime,”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Either because there's a social movement that's just so all encompassing or it's outright banned. And therefore it'll be an effect in insolvent company because it has all these liabilities, but it has to pay its assets. It won't be able to realize the value on those assets. Moreover, the AROs, they will have to be brought forward into the future. So it's interesting a company like Sandridge actually would perhaps be less vulnerable to that than a company like ExxonMobil or the Giants that just have these huge, huge amounts of property plan and equipment. But yeah, what do you make of that as a threat to the oil and gas sector as a whole?”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Cash flow instead of owning a royalty company at 15 or 20 times cash flow, like I get more than paid for that lower quality cash flow stream by that radically lower valuation multiple.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“way more compellingly if you think a 2% yield or whatever is good well six percent or seven percent yield is great like if it's from the same sources and you have maybe even more running room from some of these other ones and i have very limited exposure to the overall space because operating assets rather than royalties have more price upside and in the environment that i see likely over the next number of years the downside protection associated with royalties is good but it's insufficient to compensate for the much lower value the much lower cash flows and the much higher valuations than are available in upstream producers so over the conceivable set when i look at it on a probabilistic basis it seems very likely that producers will do better enough by this high price environment that they're worth owning even though they're a little less safe because I can own them at two times”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Where on a relative basis, this particular set of royalty cash flow plus land that they're divesting is at this sort of highly elevated valuation. When I look at it, I see there's a very large holder that's accumulated a large position in the business over time. And then that can have an effect in terms of valuation. And then there had been significant buybacks, which I generally like, but when a company is trading at a large premium to very similar peers, I question repurchasing shares at two or three times the cash flow multiple versus just using that cash to buy shares of peers at half or a third of that cash flow multiple, or in some cases even more extreme of a valuation disconnect than that, and potentially using if there was sufficient cash, buying The entirety of peers at half or whatever the multiple. And so it just.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“So, I don't dislike royalties intrinsically. I think obviously royalties are one of the highest quality cash flow streams you can own because they typically have some of the lowest operating costs and the lowest break-evens. So there's more certainty on the cash flow. And so that does deserve a premium valuation. So all of that is true and reasonable. When I look at TPL versus many of its peers, the valuation stands out, it is very highly valued versus peers. And then when I look at the assets and I look at the potential future cash flow from those assets versus their peers, it's also very highly valued. And then when I look at the history and it's like, okay, so how did that happen, right? How did you get from a likely undervalued situation to a situation?”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“On either of those companies, just those are how I approach them. And I think there's a big benefit to be able to be here in Houston to get to meet a lot of these people. And occasionally you miss something because of people's biased views or whatever, but it also, I think, in aggregate helps keep me out of trouble on stuff like that.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, they have leverage to high oil prices. And yeah, they are taking advantage of these good cash flows they're generating to pay off debt. And so that does improve their sort of overall business profile. But it just, when you look at the assets they got rid of that were fantastic at ultra low prices and you look at their development the remaining sort of development window that they have and sort of their core areas it's just it's really hard to get excited about And so you take the culture which is not so great and is sort of well known here in Houston is not so great. You take the assets and they're not so great and then the valuation and it's like fine again at high oil prices relative to other big oil companies. I just don't need to own big oil companies and it's not competitive with valuations of medium sized or smaller oil companies. You take it all together and so I don't really feel the need to own it. Again, not recommending anything.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Returns sort of intrinsically over time, not just as a oil price bet. And so, you know, it's something that I feel fine not owning. I kind of understand why people who run large funds own it. And I really, I struggle with why individual investors, small investors own it. I just can't, like there are so many different companies that have similar oil upside, but are at, let's say, a third of the valuation. It's a very popular stock among retail investors and it's just very strange. I get Berkshire owning it, right? They want to have a levered bet. It's a way to mitigate some of their inflation risk to the downside on a number of their different businesses. It makes sense, right? I don't question why Buffett's buying it, frankly. They could buy the whole thing and it might not be such a bad idea for Berkshire and they have to operate at that scale. I don't and many others don't. And I just don't, it doesn't resonate for me. And then evaluation wise.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“He did, yeah. But again, like, that was not a great deal for Oxy. That was a very expensive. They were an investment grade company, and they went and issued almost 10% interest paper. And that was, I mean, that's not good. And if you have to do that, that's an indicator. If you can issue 2% interest bonds and you issue a 10% or 8% or whatever pref, you know, that's like a pretty good sign that the market's telling you you shouldn't be doing what you're doing. But then There were other aspects too. So you look at divestitures oxy made during the downturn. You look at how it's navigated its properties and it's just consistent with my observation of their organization and management approach. It's not to say so obviously the stock has done well as oil's done well but there have been other things to own where the thing itself is sort of better organized and more likely to generate positive”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Able to know what you don't know and then be able to find the people that can give you the odds in terms of, you know, you just stay away from that casino.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“To have done those industry diligence checks and for them to have come back really positive. So again, it doesn't mean it won't happen. It just means that that's negative. That means it's less likely to happen. And then the speculative interest, because again, geologists love finding out more about geology. And so there's this tendency for oil companies run by geologists to drill more wells. And with their personal money among the geologists I know, many like to speculate on oil exploration. I can't find any that like it and I find a number that don't like it to me that tells me kind of what I need to know, right? It's like going to Vegas and you meet a bunch of gamblers and they don't like that one casino. You know, you like, don't go to that casino. You don't need to know too much of the specifics. And again, I'm not a geologist. I just, you know, and I looked at it a little bit and I think I kind of understand why they don't like it, but I don't have to, right? Like ultimately it's about having the network being able to.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Like that, who owns Pantheon? And I did look at it a little bit because there was a big push by a number of different generalist investors and some sort of like well-known people that have done well on other sort of speculative investments that have been pushing Pantheon from a much lower share price. So they've been right in terms of the stock price going up. So I asked around a little bit and the industry people I talked to that either know something about that particular asset or active in that area. It came back with a substantially negative diligence feedback and then when I looked at the company itself they've had other prospects that they've heavily promoted that actually fit a sort of similar pattern and there was historically a similar share price pattern and a similar sort of disappointment period after those were unsuccessful. So it doesn't mean it won't work. It just seems so generally for me to want to do it I would have had”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Okay, so I generally don't invest that much in exploration companies. And I know I said that I think the industry needs to do it, but that doesn't mean that I need to do it. And I think exploration is very hard. And where I've seen exploration companies be successful, there's generally been a whole sort of like crowd of engineers and geologists and other people I'll run into here in Houston who are excited about the thing or speculating on it. They know it's risky, but they're gambling on it with their money because, you know, on a risk-adjusted basis, they think it's very promising. And there are, I won't name them, but there are a couple of companies like that right now where I know a number of sophisticated investors who have industry expertise who understand that their money could go to zero but are speculating on these different exploration prospects through public stocks right now. I don't know anyone”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“So I'm really enjoying this talking about the micro. I feel like we definitely could talk about the macro oil story, but I've done interviews like that on this podcast. You've done interviews before. So I want us to give the audience something that they aspire to give something to the audience that they can't get anywhere else. So let's continue in the vein of what are the companies that you don't invest in and why in particular you said something like everyone's into Pantheon right now, but you have your concerns about that. And then also one of the companies that Warren Buffett invested in Oxidal Petroleum, what do you think about that?”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“and to reduce the productive life of the assets by forcing capital to get spent on alternatives rather than being spent on redevelopment or sufficient continued maintenance to be able to maintain production from these assets.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Some of the fundings I participated in have been to do those sorts of acquisitions. In many cases, these assets are derided as low quality. They're derided as high operating cost. And again, it's like, okay, so what's the break even? Is it $30 a barrel? Is it $40 a barrel? Is it $50? I mean, these were things that sounded really terrible when oil was at $30 and they sound amazing and like things that you get paid back for in less than a year at $100 plus oil. And so, yeah, they're selling to other typically independent producers or private companies that are buying their assets to manage them. And I think people have kind of caught on to that. So the push to divest is dying down a bit, but the push to cut new investment is pretty strong. And I think the idea now is to try to have them actually hold the assets so they don't get further developed.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Challenges with financing and challenges with popularity. And so that's less of an option for the oil majors. And again, I understand the dilemma for a mic worth at Chevron. And I have a lot of respect for him. He has to do it because his shareholders are these ETFs that are voting shares that they really shouldn't be, but they are. And so you have to deal with the world how it is, not how it should be. And so in order to maintain his job, he's doing what he has to do. And Chevron and Exxon are doing the minimal amount relative to some of their peers in terms of this malinvestment, but they are doing it. And so, you know, I get it and I understand it and I respect it because that's really his job in life is to keep his job and then try to minimize shareholder value destruction. I just don't have to enter into that game. I can just take my money and go invest in something.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“So, the good news is that because these oil majors are piling up I ran into someone who I was telling them about an oil company I was looking at and they told me no Josh, you're wrong, don't invest in that oil companies don't need the bank. I was telling them about how they were financed that no real oil company doesn't need the bank. A real oil company is the bank. And so if you're Sandridge and you have $24 share price and $5 of cash per share and you're making one or two dollars per share per quarter in free cash, I mean, you're the bank, right? You got all the cash that you need. So if X, Y, or Z bank doesn't want to do business with you, no problem, right? If every shareholder decided they wanted to go sell their sandbridge stock, congratulations. They could just buy back shares, you know, maybe at a lower price, but they could cut their share count really significantly, really rapidly. So if you make a lot of money, it protects you from a lot of different things, including”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Just to play Devil's Advocate, what about if ExxonMobil is 100%, if it's a win company, it can do business with any banking company, you can get banks, you can get equity financing, whereas the sort of the sandwiches of the world, they increasingly will have to pay a very high cost of capital. Banks won't do business with them. They can't get the necessary financing to build a well. Green energy is the future. So what do you say to that?”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“I mean, there's other sorts of categories of investments that I've been avoiding, but definitely if a company that has expertise in X goes and does Y aggressively with like acknowledged very low return targets, I mean, I don't know why I'd want my money in that and I don't like to invest in anything professionally that I wouldn't want my money in.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Historically done and to different sort of success criteria and categories and then have them do it not based on economics because there's nothing to say that today is the right moment or three years ago or whatever thing is the right moment to be initiating a giant offshore wind project. And then you look at the competition where there might have been no competition on these things 10 years ago and now you have all of these majors all bidding against each other for the rights to be able to go develop X, Y, or Z alternative energy project, you end up in a situation where it's a race to the bottom. It's similar to the shale industry that I was critiquing and that sort of private equity 25 million funds to $5 billion funds and going from it being off the run to being the consensus where they're all bidding against each other and bidding away returns. I think the same thing has kind of happened with oil majors and alternative energy.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Really didn't want there to be a case of a company that wasn't doing what they were pushing everyone else to do because Exxon was doing so much better as a stock. Exxon and Chevron were way outperforming because they were underinvesting in ESG. And so they really needed to push hard and to change the board to try to promote malinvestment so that way there wouldn't be a good case as a or a contra to the malinvestment that's being done across industry. But when you look at these companies and you look at their histories of building giant organizations that are very capable of developing large offshore oil and gas projects and you trying them, those are projects that typically have larger operating margins that have big margins of safety across a number of different factors. And you try applying those sorts of businesses to a different industry, right, to power generation, which is not something that they typically”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“So, I do like some majors more than others, and I think the market does too at this point. I think there's a big problem with having oil majors and gas majors attempt to deploy capital into alternative energy. And the push has been by their activist shareholders, which has been very weird. If you own a BlackRock ETF or a Vanguard ETF, they're voting for you for these companies to divest, so they're getting you worse returns. You've apparently given them your consent without them really telling you to vote to push these sorts of policies. So it's like a very weird governance moment. It'll be interesting in terms of liability to see what happens as this is more and more measurable as there are different companies that choose different paths. And I think it's like why engine number one and the activism at Exxon was so important because I think they”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“So I think it can be helpful for viewers to hear your framework for why what attracts you to the companies that you invest in. But it can also be fun to talk about the companies that you don't like. So let's say Josh, instead of trying to make as much money as possible in oil and gas, you're trying to make as little money as possible in oil and gas. You may still make money because oil and gas do well. I'm specifically thinking of a quote you said yesterday. You said Total and Shell are competing to see who can burn more capital. So what do you think is wrong with what and Shell are doing and ExxonMobil and Chevron? Why don't you like the majors and why do you think that they are burning capital, as you say?”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Unpredictable things all lean one direction. I think it's reasonable to bet that not in all cases but in many cases that that will continue. And so I just don't think, I don't think it's that likely that there's a windfall tax imposed in the US or Canada. Again, mostly just because I think the expectation would be it would send prices higher, not lower.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“At what happened immediately after the UK imposed these windfall taxes, which is that oils up a few dollars a barrel, that's a bad outcome from their perspective. And that's been something where people have asked me a lot about an oil export ban out of the US. There are all kinds of logistical and trade alliance issues and other stuff, but there's also just there haven't so far doesn't mean it won't happen, but it does seem that there is this pattern, which is that the policies generally also going back to Trump and, you know, I mean, for a number of years now, policies have generally been oriented towards in the very short term lowering the price at the pump and lowering the price of oil, not raising it. So I think if you just look at there are a lot of things that are very unpredictable, but if you look at something where 100% of very odd”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“I mean, it's going to send prices higher. And so the risk to me is I end up owning assets or investments in companies that are active in places that put in these sorts of taxes. The nice thing is that it's not a surprise that shortly after the UK heavily taxed one of the potential fields that could drive additional production, the North Sea, oil prices are higher. And so, you know, politicians are sometimes slow and sometimes impose policies that are contrary to what you'd expect. But one of the things that's been interesting is there haven't really been too many policies, at least in the US, that have been imposed that had immediate negative price impacts on oil. The policies always were designed at least in the very short term to make oil go down, not up. policymakers in the US or Canada or elsewhere look at”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Josh, even with natural gas still flowing into Europe, there is an energy crisis within Europe. I mean, there is one globally, but specifically within Europe because it doesn't produce that much, leading some countries, Portugal, the UK to impose price caps and actually just recently I think perhaps today, Britain announced a 25% tax on oil and gas producers' profits, or guess it was yesterday, alongside a $15 billion package of support to meet energy bills. So what do you make of that? What is the impact of that tax on the price of oil? And gas?”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“And I think that would be good for the world, and that would be negative from a supply perspective. It would increase the supply of oil and natural gas from Russia potentially. The one nice mitigating factor on that is I think Russia really likes having $115 WTI oil, $118 or whatever Brent. And so even if they accomplished peace, they might not, they might just magically have operating issues in their oil and gas fields that restricts supply. And again, they're not dumb, right? I mean, it was probably dumb and evil to invade Ukraine, but they're not dumb.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Withdrawing significantly. And so there's actually significant forward movement by the Russian army in Ukraine. It appears that there, despite many news media reports to the contrary, there was, I think, a Washington Post article recently where they essentially retracted a bunch of their reporting and said, oh, Ukraine's actually losing this, at least in the Donbass. And I'm not mispronouncing that. I apologize. So it's just really interesting. And that retraction is part of why I'm happy to say that what I've been doing, which is just trying to actually understand what's going on and reading various sources and trying to stay open-minded, especially as headlines just haven't made a lot of sense. I think the more likely left-tail risk here from an oil and gas price perspective is that Russia wins and they get what they want and the war is over and then there's a move towards lower sanctions over time.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I don't think that's so likely I mean Russia, so again like I'm more of an expert in oil and gas supply and demand and on specific oil and gas companies and less on geopolitics, but it doesn't it just They haven't done it so far and I've been reading reports on the war in Ukraine. It's just been really interesting to see what the news headlines are and then what other sort of primary source it reminds me of Pantheon a little bit right you have like the Twitter posts and the like stock promoters then you have like you know you talk to a geologist or like you know an operator of another field in the same area and you know it's not not always like sometimes the Twitter guys right and sometimes the headlines right and the you know expert's wrong but most most often it's the other way around and so the most recent thing I saw apparently Ukraine is losing in the Donbass and maybe”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“What about the opposite risk that Putin cuts Europe off? To me, that seems more likely than Europe sanctioning Putin. And then in that case, let's take it, the Dutch natural gas price TTF, that spread between the natural gas is trading in the Netherlands and where it's trading in the US, $8 or $9, that must be pretty significant, right?”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“15 or $20, there's definite demand destruction, and so hopefully it'll be industrial demand destruction and not people unable to cool or heat their homes and ending up freezing or having heat exhaustion.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Export capacity liquefied natural gas export capacity. In the meantime, it's just US industry more active here and then consuming more coal and more natural gas domestically rather than exporting it or just sticking it in inventories. But in terms of super spike or anything like that, unless things really change politically, which it doesn't appear to be the case or likely, I think we've kind of seen that there may be some temporary spikes, but I think the risk of a huge spike in European natural gas is somewhat muted, given, again, just the trajectory of the politics. And then the potential in the US is higher, but there's a cap to some extent where you see what happened in Europe, which was as prices get to a certain level, industrial activities just slow down. And so we're not quite at that level yet at close to $9 in MCF, but as we get closer to...”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“It's as big a deal as people thought it would be because I think the politicians are behaving economically rationally to some extent and not consistent with the claims and with the statements that they made sort of at the start of the war. So I think the issue for natural gas is that Russia has been undersupplying Europe and they had been since before they invaded Ukraine and so there's been these smaller than historic inventories for gas in Europe and then with high natural gas prices in Europe and this is something I started talking about last year you started to see industrial demand shift to the US and so that's actually soaked up a lot of US inventories for gas that is part of why US gas prices are higher. It's not the exports. We already had whatever we had we were going to build what we built and then two years from now we'll start bringing on additional gas.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Strange sort of economic setup that I don't think people contemplated at the time of the invasion. So I don't think it really depends on what Europe does. I don't think there's a lot of evidence that they're treating this very seriously. And so it's very interesting to see these people, there's these like photo ops where politicians show up in Kiev and take pictures with a Ukrainian president and then disappear and they're trying to pretend like they're showing support and they send some money and some weapons and then they buy Russian oil and natural gas. And so I don't think I think it's important to not say that it's the end of the world when it's not. And the reality is that they're choosing to still consume Russian energy, either because they have to or because they don't want to take the economic pain of sourcing their energy from elsewhere. And so I don't think it's”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I think the expectation was when Russia invaded Ukraine that there were going to be significant sanctions on Russia across the board. And that's where you saw that really elevated price for oil when it turned out that Europe wasn't serious about that and the US we weren't serious about it that allowed oil prices to fall back to sort of more economic levels. So I think the concern was that Europe was going to stop buying oil and natural gas and they just didn't sanction it. They said they sanctioned it and they're still consuming. I think recently Europe was consuming more Russian gas than they ever had or something along those lines. And Russia is making more money than they ever have through their exports of oil and natural gas. So it's kind of this weird situation. I think even Ukraine is consuming Russian natural gas right now. It's a very weird, they're at war, but they're doing business together. It's very, very strong.”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT
“Russia just cancels all exports of natural gas to Russia, places like Germany, there's been a big plan in Germany to secure enough energy, and part of that will be going to nuclear, part of that is coal. You have people from the Green Party relying on coal. That's something interesting. And then a lot of it is going to come from liquefied natural gas coming on tankers where it's going to have to be liquefied and then shipped and then regasified once it's on the European continent. To what degree does that play into your thesis on natural gas, as well as just the extreme price appreciation we've seen?”
2022-05-30 · Forward Guidance · Energy Stocks Remain Undervalued, Says World’s Best Performing Hedge Fund Manager | Josh Young · IDENTIFIED FROM THE TRANSCRIPT