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
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.
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.
Markets & Investment Theory
05/02/2014 Buffett’s Opportunities in the Energy Sector
08/15/2013 Commodities Index Underperforms S&P 500
02/13/2013 Skill vs. Luck in Investment Decisions
10/03/2012 Investors Avoid Equity Markets
03/09/2012 High Equity Risk Means Investment Chances
01/27/2012 Three Investment Themes for 2012
01/26/2012 Twelve Axioms of Investing
06/21/2011 Best of Times and Worst of Times
04/25/2011 Has Warren Buffett Lost His Midas Touch?
03/21/2011 The Rich Keep Getting Richer
02/21/2011 Small Cap Firms Should Perform Well in 2011
01/13/2011 Consistent Returns for Commodity Firms
01/28/2011 Seven Investment Themes for 2011
12/30/2010 Stock Picking Returns to Favor
04/21/2010 How Buffett, Munger & Davis Outperformed
03/28/2010 Lessons from Legendary Investors
09/15/2009 S&P 500 has worst decade ever
06/01/2009 Avalanche of cash set to slide
04/04/2009 Global declines in net worth
01/09/2009 Market Outlook for 2009
11/14/2008 Hope for a Dismal Economy & Market?
07/01/2008 Monetary Policy and Small-Company Stocks
03/31/2008 Return Persistence & Stock Performance
08/05/2004 Leverage and the Impact of Slowing Growth
Energy & Agricultural Sectors
06/25/2014 Energy Sector to Return to Investor Favor
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
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?
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 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
For Information on
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SMU Law School
MTU APMP Program