Latest news with #SmeadCapitalManagement
CTV News
14 hours ago
- Business
- CTV News
MEG Energy unlikely to find another buyer after rejecting Strathcona: expert
Cole Smead, CEO and portfolio manager at Smead Capital Management, joins BNN Bloomberg to share his outlook on the oil and energy sectors.
Yahoo
30-05-2025
- Business
- Yahoo
US deficit is an 'economic stabilizer' amid uncertainty
Despite worries about the impact of President Trump's changing tariff policies, the US economy is chugging along. Inflation softened in April, fresh data shows, yet soft data about consumer sentiment remains low. Smead Capital Management CEO Cole Smead says it's the US's deficit that is supporting the economy despite spikes in uncertainty. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. Tariff volatility is back on Wall Street. President Trump lashing out against China this morning, saying China has violated its agreement with the US. Meantime, Treasury Secretary Scott Beston saying talks with China are quote, a bit stalled. His comments coming after a federal appeals court offered Trump a temporary reprieve from that ruling that did deem his tariffs illegal. Joining us now to break down where to ride out the trade-induced volatility is Cole Smead. He is CEO of Smead Capital Management, which oversees more than $7 billion in assets under management. Cole, it's great to have you in the studio. Thank you for being here. We were just talking about this morning's inflation data indicating that there is a little bit more progress when it comes to prices than we saw in the Consumer Price Index print, but the tariffs still remain a headwind, and that certainly played out in this morning's economic data. How does that impact your investments going forward? Yeah. Um, well, add one more thing, you had consumer confidence hit a low. A low that we saw in 2020, a low that we saw in '09, and also 2011, okay? And I say that because, um, when you put all these things together, I think it's really incredible how the US economy has functioned despite high levels of uncertainty, particularly for business spending, okay? Um, if you go talk to business owners right now, they're pretty scared about the whole tariff situation. I was in an event, someone was, uh, you know, makes guitars for a living, and they were just freaking out. Um, go talk to people on Main Street, and they're not like at soccer practice being like, you know, what's going on today with tariffs? Um, and I say that because it shows you the difference between business. Are they not though? I mean, consumer sentiment numbers have been plummeting. In New York, yes. But in Main Street America, no. That's the best evidence. What is your what is your evidence of that? Are you talking to people across America? Uh, well, I I just mean if you just go talk to people day-to-day, like I I run into investors, I run into people in the media business, and I run into people in, you know, business owners. And again, that's a big idea for them, especially if you import or export your goods, okay? Um, when it comes to day-to-day beyond that, um, that's just not showing up. I'll give you a picture of this. Um, what are we spending in deficit? It's 7%. We normally only spend that. If you look back at the history, we did it, big deficit in World War I, big deficit in World War II. But we quickly tightened up our budget to get back to a much lower level of deficit or none at all. We have not tightened our belt at all. And what that's doing is it's providing this huge economic stabilizer and buffer in the economy. So this is a lot of uncertainty to pour onto the economy in, say, a 60-day stretch. And yet at the same time, economy's not falling off. Consumers' spending is not falling off. Why not? And the answer is because it's really tough to stop an economy when you're spending this much in deficit. And no one's really saying that, by the way. But well, to the very report that you just mentioned, the Consumer Confidence, they actually wrote in and said the tariffs are still top of mind for consumers' minds. That was in the write-in responses. The first mentioned in that stanza as well. So to say that they're not talking about it is incorrect based on that same report you're citing. Correct. Correct. But if you look at it, the spending though isn't going negative. What you're saying is the difference between the soft and the hard data, it sounds like. Correct. When also, that's that soft data is bad data to invest based on. So at low points in the data, what should you expect? That the economy is going to pick up. Because I said 9, 11, 20 and today. And so I would expect the economy picks up because when those people survey, they're telling you, like the weatherman, hey, it's sunny today. It's like, why already know that? Um, they're telling you that there's uncertainty. But the reality is you can't invest based on that. Well, I think we're going to wake up in 6 to 12 months. We're going to find out is we did not slow the US economy because until we slow our deficit spending, you can't slow it. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
30-05-2025
- Business
- Yahoo
US deficit is an 'economic stabilizer' amid uncertainty
Despite worries about the impact of President Trump's changing tariff policies, the US economy is chugging along. Inflation softened in April, fresh data shows, yet soft data about consumer sentiment is remains low. Smead Capital Management CEO Cole Smead says it's the US's deficit that is supporting the economy despite spikes in uncertainty. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
20-05-2025
- Business
- Yahoo
Value Investors Look for Bargains in Oil and Gas Sector
Looking at Berkshire's mindblowing $350 billion cash stash... ... one would think that there is nothing in the market that a value investor would find attractive. One would be wrong: almost half of all mid- and small-cap oil and gas stocks in the US are now trading below their book values. That's the highest level since the pandemic. And according to Bloomberg, it's a gift for value investors worshiping the gospel of Warren Buffett and his mentor Ben Graham, who referred to these kinds of opportunities as 'cigar butts.' 'We're going to take advantage of a lot of suckers,' said Cole Smead, CEO of Smead Capital Management, who has been buying additional oil and gas stocks that are trading well below book. Energy has been the second-worst performing sector in the S&P 500 in Q2, losing roughly 10% since President Donald Trump's April 2 tariff announcement, as oil prices tumble due to fears of global trade wars sparking economic slowdowns and OPEC member countries boosting production to increase supply. Two weeks ago, West Texas Intermediate crude fell to around $55 a barrel, a level it touched in April and before that February 2021. It has rebounded only modestly since then and remains down about 15% for the year. Today, shares of oil and gas companies such as Murphy Oil, Crescent Energy and Noble Corp., are trading for less than what the assets on their books are worth. That's the classic definition of value investing, where the stock is priced at less than what the business would be worth if it was stripped and sold for parts. At this point, 33% of Russell 3000 energy stocks are trading below their book values. The figure rose as high as 40% late last week, before the US and China agreed to a 90-day trade truce, which gave a slight boost to oil prices and energy stocks. The last time this happened, it preceded off a two-year run in 2021 and 2022 when energy trounced the market and was the top-performing sector. A similar proportion of large- and small- Canadian oil and gas stocks have also fallen into the same range, Bloomberg calcualtes. Smead, who is invested on both sides of the border, thinks the stocks are undervalued and poised to at least return to book value, and likely more. 'I don't need to have a rosy picture' for the energy outlook to make money trading energy stocks, Smead said. Smead isn't alone in buying energy names cheap. A handful of cash rich oil and gas companies have indicated they'll repurchase their stock if it has sold off sharply. Cenovus Energy bought back C$62 million ($44 million) of its own shares in the first quarter and has nearly tripled that to C$178 million in the second quarter so far. 'The smartest capital allocation today is to repurchase shares' rather than paying down debt, Diamondback Energy CEO Travis Stice said on a May 6 conference call. 'Buybacks are the right thing at these levels' as crude prices have slipped, Stice said, adding that he expects the Texas-based oil producer to increase its stock repurchase program. Not everyone will be able to take advantage of their cheaper stock price as they don't have the available cash. Chevron , for instance, said it will cut buybacks in the second quarter following the drop in crude. It's bigger, and higher quality peer, Exxon, however, continues to repurchase its stock with clockwork regularity as it print money quarter after quarter. Then there is also a debate about how best to value oil and gas producers. BMO Capital Markets analyst Jeremy McCrea says book value isn't a useful measurement for the energy sector since it can change quickly and dramatically with commodity prices. He prefers cash flow, Ebitda and reserve values, but says the stocks still are cheap based on those metrics. 'Typically, the best times to invest in the energy sector are when it feels the most uncomfortable,' McCrea said. 'And it's pretty uncomfortable right now just given this uncertainty. That's historically some of the better times to come into the market.' By More Top Reads From this article on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
15-05-2025
- Business
- Yahoo
A trade made for Buffett: energy stocks priced below book value
(Bloomberg) — Here's something you don't see in the market too often: A third of all mid- and small-cap oil and gas stocks in the US are now trading below their book values. That's the highest level since the pandemic. And it's a gift for value investors worshiping the gospel of Warren Buffett and his mentor, Ben Graham, who referred to these kinds of opportunities as 'cigar butts.' 'We're going to take advantage of a lot of suckers,' said Cole Smead, CEO of Smead Capital Management, who has been buying additional oil and gas stocks that are trading well below book. Energy is the S&P 500's second-worst performing sector in the second quarter and is leading the way lower on Thursday. It has lost roughly 14% since President Donald Trump's April 2 tariff announcement, as crude prices tumble due to fears of global trade wars sparking economic slowdowns and OPEC member countries boosting production to increase supply. Two weeks ago, West Texas Intermediate crude fell to around $55 a barrel, a level it touched in April and before that February 2021. It has rebounded only modestly since then and remains down about 15% for the year. Now, shares of oil and gas companies, including Murphy Oil Corp, Crescent Energy Inc. and Noble Corp., are trading for less than what the assets on their books are worth. That's the classic definition of value investing, where the stock is priced at less than what the business would be worth if it was stripped and sold for parts. At this point, 33% of Russell 3000 energy stocks are trading below their book values. The figure rose as high as 40% late last week, before the US and China agreed to a 90-day trade truce, which gave a slight boost to oil prices and energy stocks. The last time this happened, it preceded off a two-year run in 2021 and 2022 when energy trounced the market and was the top-performing sector. A similar proportion of large- and small- Canadian oil and gas stocks have fallen into the same range. Smead, who is invested on both sides of the border, thinks the stocks are undervalued and poised to at least return to book value, and likely more. Buying Cheap 'I don't need to have a rosy picture' for the energy outlook to make money trading energy stocks, Smead said. Smead isn't alone in buying on the cheap. A handful of well-capitalized oil and gas companies have indicated they'll be opportunistic, repurchasing their stock if it has sold off sharply. Cenovus Energy Inc. bought back C$62 million ($44 million) of its own shares in the first quarter and has nearly tripled that to C$178 million in the second quarter so far. 'The smartest capital allocation today is to repurchase shares' rather than paying down debt, Diamondback Energy Inc. Chairman and CEO Travis Stice said on a May 6 conference call. 'Buybacks are the right thing at these levels' as crude prices have slipped, Stice said, adding that he expects the Texas-based oil producer to increase its stock repurchase program. To be sure, many oil and gas producers won't be able to take advantage of their cheaper stock price because they don't have the available cash. Chevron Corp., for instance, said it will cut buybacks in the second quarter following the drop in crude. There's also a debate about how best to value oil and gas producers. BMO Capital Markets analyst Jeremy McCrea says book value isn't a useful measurement for the energy sector since it can change quickly and dramatically with commodity prices. He prefers cash flow, Ebitda and reserve values, but says the stocks still are cheap based on those metrics. 'Typically, the best times to invest in the energy sector are when it feels the most uncomfortable,' McCrea said. 'And it's pretty uncomfortable right now just given this uncertainty. That's historically some of the better times to come into the market.' —With assistance from Tom Contiliano. (Updates oil price decine and energy sector performance in fourth paragraph.) ©2025 Bloomberg L.P. Sign in to access your portfolio
