Senior managers at Arnold Van Den Berg (Trades, Portfolio)’s Century Management firm on Friday discussed their bullish outlook for oil, a sector that encompasses 15.6% of their investment portfolio as of the third quarter-end.
Century has enjoyed substantial gains on energy this year as crude prices have stabilized, having ramped up its oil investments at bargain-bin prices. Its best performer, Pioneer Energy Services Corp. (PES, Financial) advanced 201% year to date, giving the firm an estimated 133% return. Only one of its energy holdings, Ensco PLC (SEV, Financial), has declined, down 35.6% for the year so far, for an estimated 61% loss. Multiple other holdings have more than doubled. Co-chief investment officer Jim Brilliant said in a video released through the firm’s website that he expects further upside.
“We look to 2017 going from [supply and demand] being in balance to actually seeing a supply deficit,” Jim Brilliant, who led Century’s research in energy investments, said. “And that should provide continued movement upwards in the price of crude oil.”
Brilliant’s main reasons for a supply deficit thesis were that oil companies have slashed their exploration budgets and shale producers will need time and sustainable oil prices to boost production. Both will push back a significant increase in production several years, he said. This, combined with his expected increase in demand, sets the stage for a bigger deficit than people are expecting.
Watch the video below.
See Arnold Van Den Berg (Trades, Portfolio)'s portfolio here.
