Sharehub 2016 Hotlist Results – Week 49

With just over 2 weeks left to go before the final orders are called on 2016, the sharehub hotlist leads the pack by a whopping 106%.

The sharehub top ten has delivered (to date) a blockbuster return of 115%

and … there’s still 2 weeks + to go!

The one blot on the score card is of course XEL which went in to adminstration after bondholders called time on the Bentley Heavy Oil field. It’s a huge shame and a big loss to UK O&G. Smaller companies should be supported and with just £90mil debt against an asset holding over 260mmboe ‘reserves’ the mind boggles on why there was not a better solution. Timing was a leading factor and the recent progress in PoO based on OPEC and non OPEC deals came too late for XEL shareholders. That said, one would have expected the bondholders to have waited it out until that news had arrived.

Moving onto the success stories… and there are many. Lets look at the multibagger notched up thus far:

In pole position is Kaz Minerals with a very sweet 3 bagger. Closely followed by Hurricane Energy – although that too has a 3 bagger status after breaking 43p this year. Next up is Glencore with a 2 bagger. Ithaca matches that although would command 4 bagger status if taken from 16p lows. Tullow looks very likely to deliver another multibagger for the sharehub with 12% of gains just required.

It’s been a remarkable year of recovery for the commodity sector. And with PoO still in the low $50’s, there’s clearly plenty left in the tank for more growth across the top ten picks.

In particular, the below stocks that have lagged the market for no particular reason. These stocks are likely to ‘catch up’ as investors look for solid stocks with decent upside. The forgotten ones as I call them. I expect the below stocks to begin to move up with more speed as the market moves towards a scenario of higher PoO prices and importantly… stable prices.

  1. Amerisur Resources – 10 wells planned in 15 months and a bucket load of catalysts to see the stock rerated. It’s up just 8% this year despite doubling production and finalising the much touted OBA pipeline. It’s 26p today and is lagging peers. It should be in the mid 30’s.
  2. Faroe Petroleum – This one is a gem. Zero debt, cash in bank and 18kbopd production after recent DONG acquisition. There are no many debt free 18kbopd, resource rich companies out there today that are trading at £300mil market cap. Most are £400mil+. This one should be trading in the £’s and not the pennies.
  3. Ophir Energy – The stock was just 65p a few weeks ago but has risen strongly over the last week to test 90p levels. Based on Tanzania assets and recent farm out deal on Fortuna project, the stock should be 120p+
  4. Premier Oil – Debt negs have dragged on and their have been a bucket load of shorters manipulating the price. But the reality is… higher PoO makes a huge difference to a company like PMO with 85k+bopd. The stock has barely moved a penny since PoO was last at $47pb. The market is right to discount based on unknown’s and debt issues but even at 100p+ PMO would still be showing a huge discount compared to peers. When this one gets its house in order, it should be heading for 150p+. But it’s risky and not for the inexperienced.

Placing the sharehub top picks aside, it is only fair that the reigning champions – the Independent top ten, gets a mention. Earlier in the year, the top ten picks were in the red and they looked destined for the wooden spoon. The Daily Mail top ten picks were streets ahead of them. Today, it’s all change. The Independent has swung from a 10% loss position to almost a 10% gain level. Great performance. The Daily Mail has lost ground but still holds a decent 4%+ gain.

Neither come close to thesharehub’s whopping 115% gains. And after several years of heavy losses, it’s about time the sector did a u-turn and started giving back some of what it took away. If the tones from the Saudi’s are to be believed, then 2017 looks set to be another strong year of commodity stock performance as PoO rises and the market rerates the beaten up sector.