Huge numbers out of Eagle Ford... Texas oil production to surpass 3 million barrels per day this year... New high for ExxonMobil... Hedge funders make a record $21.3 billion... Record nine-figure property deals show inflation... Don't miss Steve Sjuggerud tomorrow...
We wrote it, did you buy it?
In the January 2012 issue of Stansberry's Investment Advisory, Porter told subscribers about Texas' Cline Shale... He said it would be the second-largest oilfield in the U.S. From that issue...
There is a major new shale play that's only now being staked out by the major independent oil companies in the United States. Based on information I have, I believe this new field will become the second-largest oilfield in the United States over the next 20 years (second only to the Eagle Ford).
I base this statement off test wells that have been dug, the size of the shale (according to seismic data), the total organic carbon (TOC) of the shale's core samples, and the proximity of an existing major oilfield. For now, you'll have to take my word for it, because I have agreed not to name the shale or disclose where it sits...
My contacts in the oil business are currently buying leases and royalties in the play which has gone completely unreported by any major newspaper or oil industry magazine. We are in this story at its infancy. The two major independent companies with large acreage in the field today are Chesapeake Energy (CHK) and EOG Resources (EOG). Both companies have operations in all or most of the major U.S. shales and have proven to be the best large independents at getting large-acreage positions in emerging shale plays – as is certainly the case here.
If you want one chart to disprove "Peak Oil," it's EOG... Shares are up more than 100% over the last two years.
The company released earnings this week... And it's clear the shale boom is in full swing... Profit in the quarter jumped 34% from $495 million a year ago to $661 million today. Oil and gas output rose 18%. Crude oil and condensate production was up 42%.
Texas is producing around 2.7 million barrels of oil per day today... And oil giant ConocoPhillips believes it will reach 3.4 million barrels per day by the end of 2014. That would put the U.S. behind only Saudi Arabia (which produces around 9.7 million barrels per day) in terms of oil production for members of the Organization of the Petroleum Exporting Countries (OPEC).
With all that oil coming out of the ground – and production expected to increase further – oil prices have to fall. Still, the energy sector is booming... World Dominator ExxonMobil hit a new all-time high today. Dan Ferris' Extreme Value subscribers are up 82% on the position. Here's what Dan had to say in his original recommendation...
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If you want proof of inflation, look no further than the compensation of hedge-fund managers... and how they're choosing to spend their billions.
The 25 highest-earning hedge-fund managers in the U.S. took home $21.3 billion last year, according to annual rankings from Institutional Investor's Alpha magazine. That's up 50% from 2012. Remember, as more money is printed, these "masters of the universe" manage larger and larger pools of money... and collect larger and larger fees.
Appaloosa Management founder David Tepper topped the list with a $3.5 billion payday last year. He was followed by Steven Cohen and John Paulson, who earned $2.4 billion and $2.3 billion, respectively.
Perhaps there's some connection with these massive paydays and the soaring price of luxury real estate...
An apartment in London's One Hyde Park sold this month for a record 140 million pounds ($255 million). Yes, someone paid a quarter of a billion dollars for a 15,000-square-foot penthouse.
Back home, hedge-fund manager Barry Rosenstein, founder of Jana Partners, just purchased a home in East Hampton, New York for $147 million... That breaks the record for a U.S. single-family home set last month when someone purchased an estate in Greenwich, Connecticut for $120 million.
But the trend doesn't stop there. More and more rich people want to trade in their paper money for high-end real estate. Home purchases of $2 million and over in the U.S. increased 33% in January and February from a year ago – the highest level for the two-month period since 1988.
Purchases of million-dollar homes rose more than 7.8% in March from a year ago, according to data from the National Association of Realtors. Meanwhile, transactions for homes costing $250,000 or less (almost two-thirds of the market) dropped 12% over the same period.
True Wealth Systems editor Steve Sjuggerud stopped by my desk in Baltimore today... He's in town to prepare for the live webinar he's hosting tomorrow night. Steve is going to explain the strategies he uses in True Wealth Systems to produce huge gains...
Steve and a team of quants spent years back-testing data to find trading strategies that produce safe and consistent gains in the market... Thus, True Wealth Systems was born in 2011. Since that time, Steve has amassed an astounding track record... Of the 14 positions currently open in the True Wealth Systems portfolio, 13 are showing a positive gain (the one loser is down 1%). The average open position is up 49%... And last month, he closed out of his biotech position for a 184% gain in less than 16 months.
On the webinar, Steve will discuss his secret trading strategy... He's looking for situations that go from "bad to less bad." But that's just the beginning...
In addition to further discussing his True Wealth Systems strategies, Steve will explain why stocks don't equal the economy. Investors can often get better returns when the economy is bad. And he'll explain why investing in exchange-traded funds often makes more sense than simply investing in individual stocks.
This webinar is 100% free to attend... You can watch from the convenience of your own home. Plus, we're giving away a free book just for signing up... A special copy of Steve's Little Book of Low Downside High Upside Trading Models.
The webinar is tomorrow night at 8 p.m. Eastern time. To make sure you're on the list, you can sign up by clicking here.
New 52-week highs (as of 5/6/14): Anadarko (APC), BP (BP), C&J Energy Services (CJES), Calpine (CPN), Carrizo Oil & Gas (CRZO), ProShares Ultra Oil & Gas Fund (DIG), Dorchester Minerals (DMLP), Freehold Royalties (FRU.TO), and Cambria Foreign Shareholder Yield Fund (FYLD).
An empty mailbag today. Surely one of you has a good story to tell us. Let us know at feedback@stansberryresearch.com.
Regards,
Sean Goldsmith
Baltimore, Maryland
May 7, 2014
What I learned from Warren Buffett...
Editor's note: Today's Digest Premium is excerpted from the May 6 Extreme Value weekly update. In it, Dan Ferris shares the insight he gained from attending the Berkshire Hathaway annual shareholders meeting, led by Warren Buffett...
Last week, I (Dan Ferris) attended the Berkshire Hathaway annual meeting in Omaha, Nebraska. It was well worth the trip...
The meeting is a six-hour question-and-answer session. It's one of the best financial-education experiences in the world.
As usual, Chairman and CEO Warren Buffett, now 83 years old, peppered us with useful financial information about Berkshire. Here are some samples of what it's like to sit in the audience and listen to the world's greatest investor talk about the business he has been building every day since 1965...
One example... Buffett told us Berkshire now has $77 billion of float. Float is the amount of insurance premiums the company may one day have to pay out as insurance claims. In the meantime, it can invest the float and earn interest, dividends, and capital gains. Berkshire's float should keep growing even when it pays out claims. This is one of the best uses of other people's money in all of finance.
Another example... Buffett said Berkshire's 1972 acquisition of See's Candies taught him a lot about owning a great brand. He then said it's highly unlikely he'd have bought Coca-Cola stock in 1988 had he not bought See's Candies. And as of December 31, Buffett has made roughly 13 times his money on Coke. He said there's nothing like owning a great brand-name business to teach you about its enormous value.
Berkshire Vice Chairman Charlie Munger, now 90 years old, had some fine moments, too. Munger shared two secrets of Berkshire Hathaway's success...
He said Berkshire was good at "ignorance removal" and "scrambling out of mistakes." He gave the purchase of See's Candies as an example of ignorance removal. Before that, neither he nor Buffett really understood what it meant to own a great brand.
Munger named the acquisition of Berkshire itself as an example of scrambling out of a mistake. Berkshire was in the textile business when Buffett started acquiring its shares in the 1960s. The best thing Buffett ever did in the textile business was get out of it. It was an awful, low-margin commodity business that was getting killed by foreign competition.
Munger joked of the Berkshire Hathaway acquisition, "Imagine how much better we'd have done with a better start."
– Dan Ferris
What I learned from Warren Buffett...
Dan Ferris recently returned from a trip to Omaha, Nebraska... While he was there, he gained some unusual insight into the mind of investment legend Warren Buffett...
To continue reading, scroll down or click here.