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Economic declines devastate the net worth of individuals globally: Global declines in net worth

 

We take a look at the impact of economic instability and depletion on the energy sector: report

 

Rolling the dice on our energy future: Matthew Simmons

 

We present our outlook on energy to the Park Cities Rotary club on 3.31.09: report

 

OPEC issues their monthly report on crude oil: Opec report

 

We were interviewed by James Puplava of the FSN network last Friday on the energy sector: Puplava

 

Warren Buffett issues the Berkshire Hathaway (BRKA) annual investor letter—and reports the worst year for shareholders in decades: 02/27/09 Berkshire Hathaway (BRKA)

 

Economic weakness kills energy demand, and prices, for now: Economic Weakness Kills Energy Demand

 

A MSN Money columnist interviews us and we discusses one of our favorite companies in the agricultural sector—and what has become one of our largest holdings: Brush column

 

Demand in the energy sector correlates with global economic activity—so short term we are seeing quite a bit of weakness. But longer term the sector remains attractive—energy sector

 

Matthew Simmons discusses the energy markets—and the problems ahead: Simmons

 

Is energy really a form of money? Chris Martenson has some interesting ideas in a short 10 minute presentation: Energy & the Economy

 

Investment banker Matthew Simmons discusses energy risks and crisis in a recent presentation: Simmons

 

An interesting presentation on energy yield and alternative fuels discusses some of the issues alternative fuels face—in addition to the effect of a lack of credit and low energy prices on alternative fuel development: Alternative Fuels

 

The relationship of the energy sector and the global economy makes a compelling story for investors—and serves to affirm our bullish long term view on the sector (video presentation):  Energy & Economy

 

We discuss our outlook for the energy sector in a report to our investors—is the recent weakness due to the ‘shoulder season’ or due to the economic slowdown: Shoulder season masks long term trends

 

We ask: Is the stock market efficient? The Market, Investments, and the ‘Efficient Market Theory’

 

July 1st marked the 9th anniversary of the LSGI Venture Fund L.P.  Since the structure of  the LSGI investment portfolio is essentially identical to the investment partnerships Warren Buffett and Charlie Munger ran in the 1950’s and 1960’s an interesting academic question arises:

 

Using the Capital Asset Pricing Model (CAPM) to review the returns for the first nine years of each partnership portfolio, which active manager has generated more ‘alpha’ (excess returns over and above that expected by the market) in the first nine years of running their partnership—(1) Warren Buffett and the Buffett Partnerships? (2) Charlie Munger and the Munger Partnership?, or (3) LSGI and the LSGI Venture Partnership?

 

We report our findings in a report to our investors: CAPM Report.

 

Forty percent of our LSGI Fund portfolio was included in the Fortune Small Business 100 list featuring 100 of the fastest growing public firms in the U.S. We recently published a study on the impact of monetary policy on the performance of small cap stocks - a topic of both academic and practical interest to our investors: MTU white paper

 

Who would guess that oil and gas leases would be auctioned on e-Bay? We discuss the issue with Platts: article

 

The Fortune Small Business 100 list was published in the July 7th issue—featuring 100 of the fastest growing public firms in the U.S. We own nine of these firms in our portfolio. And we discuss one of our favorite plays in the Fortune Small Business article: FSB 100: A Farm Equipment Maker Goes Far Afield

 

According to Ned Davis Research if an individual invested $1,000 in the S&P 500 index from November 1st to April 30th — the ‘winter season’ — every year from 1950 to 2006 their account would now be worth $38,799 before tax considerations. If, over the same 56 year period, an investor had invested the $1,000 in the S&P 500 index from May 1st to October 31st — the ‘summer season’ — they would have  $916. During that 56 year period an investor using this seasonality strategy would have lost money. We examine the seasonality factor over a much shorter period than Ned Davis—the last eight years—to see if the excess returns have been arbitraged away in recent years or is still present to a degree that can be exploited by investors. The results of our study can be described as stunning: Seasonality study

 

                                                                        Archive of interesting articles

 

In the April 23rd issue of Barron’s we noted that “Global demand and supply issues should push crude oil prices well above $70 a barrel by the Fourth of July. Expect fireworks in the energy sector this summer, with a potentially explosive move to the upside” At the time oil was selling at $62 a barrel more or less. It is the Fourth of July - and crude futures are at $71.41 per barrel.

 

Admiral Rickover, the father of the nuclear powered Navy, discusses challenges of the Fossil Fuel Age—how energy powers our society and economy — in remarkable a presentation made in 1957.

 

The success of our quantitative stock selection methodology in finding small, young companies with growth potential, is mentioned in the Dallas Morning News Sunday Business Section. To use an analogy we are looking for a ’Michael Jordan in grade school’. We also establish a ‘Barron’s Challenge’ scholarship for a senior finance student in the Applied Portfolio Management Program at Michigan Tech next year.

 

We placed second in the Professor category of the 2006 Barron’s market challenge using our LSGI screens and research—outperforming the S&P 500 index by 78.5% in a six month period. In the 2007 contest just ended we also placed second and sixth overall—out of 1,976 portfolios, outperforming the S&P 500 index by 29.0%. For our efforts we were mentioned in an article in the Barron’s April 23rd issue. We are in the top 1% of portfolios performance wise both years —managing an active portfolio that mirrored the LSGI Fund portfolio. The odds of this happening by chance are similar to the odds of being stuck by lightning.

 

What makes someone as successful as Warren Buffett? A new study examines some characteristics of very talented individuals in a number of fields. What common characteristics do they share?

 

In theory our research should identify firms that have a high probability of outperforming the market—and using our LSGI research to construct a portfolio of attractive firms we placed second in the Professor category in the recent Barron’s Challenge

 

Can individual investors beat the market? A recent Federal Reserve System  study using “extreme bounds” methodology normally reserved for examining complex economic systems examined 37 years of market data and found that a few factors were “robust” – statistically significant – indicators of above average stock market returns. Buying stocks with these characteristics should outperform the market – and are factors we utilize managing the LSGI portfolio.

 

Long term investing still can be rewarding. Living quiet, unpretentious lives Mr. and Mrs. Othmer - a professor of chemical engineering and a former teacher - died a few years ago in their nineties. When the Othmer's died, friends were shocked to learn that their estate was worth $800 million! The Othmer story is not unique. They had one secret: they were early investors with Warren Buffett.

 

Energy & Agricultural Sectors

06/25/2014  Energy Sector to Return to Investor Favor

03/24/2014  Will a Robust Injection Season Elevate Prices? 

02/26/2014  Natural Gas Revitalized while Oil Plows Ahead

12/11/2013  Shale Caused Future Crude Oil Supply Crunch?

10/25/2013  Monetary Easing to Address Labor Market

09/04/2013  Analysis Supports triple Digit Oil Prices

06/10/2013  Energy Sector Still Out-of-Favor with Investors

04/30/2013  OECD Forecasts Sharply Higher Crude Demand

01/18/2013  Oil, Agriculture, and the Stock Market

11/21/2012  Does HFT Harm Small Cap Stock Valuations?

11/16/2012  Domestic Natural Gas Turning Positive?

11/14/2012  Bullish trends in the Global Agriculture Sector

10/23/2012  Record Food Prices to Disrupt Energy Markets

10/22/2012  Oil and the No-growth Economy

08/14/2012  Energy Sector Developments Remain Positive

07/09/2012  Global Oil Market Chugs Forward

07/06/2012  Global Food Prices Set to Soar

05/14/2012  Food Prices Mirror Oil Prices

03/21/2012  Global Developments Drive High Energy Prices

11/29/2011  Tight Oil Inventories Supports Record Prices

07/18/2011  Energy Sector: Positive Trends Continue

06/11/2011  Power Shortages Push Oil Demand Upward

06/09/2011  Nuclear Energy Opportunity by Policy Change

05/18/2011  Excess Crude Production Capacity Falls

04/20/2011  A New Era in the Energy Sector

04/14/2011  EIA Forecasts Record Oil Demand for 2011

03/11/2011  Agriculture Prices Stay Bullish

02/28/2011  Unrest in the Agriculture Sector

02/24/2011  Global Energy Demand Remains High

01/23/2011  China: The 800 lb. Gorilla in Energy Sector

01/18/2011  The “Five Horsemen of the Apocalypse”

12/17/2010  Food Prices will Rise for Years

12/10/2010  Agriculture Sector Outlook: Bullish

12/06/2010  Energy Sector Outlook: Bullish

11/12/2010  Energy Sector Outlook Positive for Investors

11/11/2010  Ag Sector Creates Global Opportunities

09/22/2010  Merger frenzy and Food Riots

08/14/2010  China Energy Demand Soars

04/10/2010  Bullish Energy Studies Released

03/05/2010  Oil Demand Firms For 2010

12/01/2009  Oil Crisis Ahead?

12/01/2009  Shale Gas Economics    

10/15/2009  Tribute to Norman Borlaug

09/12/2009  Global food crisis revisited

08/08/2009  Long term energy trends positive

07/08/2009  Art’s Way Q2 Call Summary

06/26/2009  Haynesville shale opportunities

05/14/2009  Energy a Security Issue

04/04/2009  Instability & depletion impact production

03/20/2009  Energy Sector report

02/18/2009  Economic Weakness Kills Energy Demand

01/09/2009  The Energy Crisis Has Not Been Solved

12/22/2008  IEA Study: Energy Supplies Remain a Concern

10/09/2008  Shoulder Season Masks Long Term Trends

08/07/2008  Hurricanes May Blow Energy Sector Off Course

07/24/2008  Bull Market for Energy Remains in Place

06/16/2008  Economic Growth Drives Demand Upward

05/16/2008  Oil Demand from China Rockets Upward

05/16/2008  Grain Markets: Panic Buying and Food Riots 

04/28/2008  Long Term Forecasts Point to a Hot Summer

04/21/2008  Global Grain Prices Reach Record Levels

04/21/2008  Energy Sector Bullish Trends Still in Place

03/28/2008  A New Era in the Energy Sector

02/22/2008  Energy Sector Trends Paint “Alarming Picture”

02/22/2008  Food Shortages Could ‘Continue for Decades’

09/10/2003  Has World Crude Oil Production Peaked?

Lectures, Presentations & Studies

09/27/2011  Long Term Energy Outlook Still Bullish

08/01/2009  LSGI Fund 10 year report: study

07/15/2008  CAPM Report: Are We Generating Alpha?

07/07/2008  SMU Lecture Series: The Fourth Era of Oil

04/18/2008  Can Active Managers Generate Excess Returns?

03/25/2008  Monetary Policy & Small Cap Stocks

Finance Student Scholarships

12/01/2009    Work Study Grants

04/04/2009    2009 LSGI Scholarship

01/15/2008    2008 LSGI Scholarship

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