Pod: Acorn Stock Take: Part 1

The Weekend Notes:

The 🐿️'s Annual Acorn 'Stock Take'

The Visuals and Links:

Big changes coming to Blind Squirrel Macro at the end of June. If you missed the earlier email, details can be found in the post linked below.

The 🐿️ is going dark

Source: Koyfin.

In some cases (Rheinmetall, SAAB and Kongsberg) these new multiples require some Herculean revenue growth in the underlying businesses to be justifiable. The high-flyers have now become significant overweight positions in the 🐿️’s EuroMIC basket.

WTI 3:2:1 crack spreads - a gentle uptrend since the early 1990s (with a few wild spikes during which the refiners over-earned).

Transocean ($RIG) not included in the table above as it trades on solvency risk (given its debt load) rather than earnings risk.

Readers that would like a more detailed explanation of the earnings revision factor should read Kevin Muir’s note on the topic from last November - unlocked link (thanks Kev!) here, but you should all be MacroTourist subscribers!

Significant further cuts to consensus forward EPS as analysts chase price.

The excellent chart below from Rob Connors of

The Crude Chronicles

shows that offshore profitability still at a fraction of long-term cycle averages. Even a modest pick-up in utilization rates from a recovery in E&P budgets by the oil majors should see a violent inflection in earnings for an industry which has now consolidated into an oligopoly.

With Noble acquiring Diamond Offshore last year, 5 players now control the entire offshore fleet. Day rates and shipyard availability (let alone interest - the yards got completely rinsed by the last offshore bankruptcy cycle) are still miles away from a time when investors in the sector should be concerned about newbuild risk.

A wild ride as the theme moves in and out of institutional favor. Cameco is basically the only major uranium stock globally that a large institutional fund can own.

My SPUT has doubled since I bought it, but surely it was supposed to be a $60 stock by now! 😉

Junior miners have been doing what junior miners do - part retail investors from their savings!

My plan is to stick around until something really happens. My man

PauloMacro

thinks we may be close. In his recent note he outlines a tight physical / spot market (no speculative longs left); a long-term contracting market by utilities that has been artificially paused for the past year; “rinsed” institutional and retail positioning in the equities; and he is excited about the nuclear-related Executive Orders emanating from the Trump Administration.

Music from Max Slorach. Find him at:

email: maxonsaxentertainment@gmail.com / web: maxonsax.com.au

Thanks for listening!

Squirrel Out!

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