Investment trust insider on resources – James Carthew: New City trio rides infrastructure rally
As QuotedData compiled the performance statistics for July an unexpected pattern emerged. Commodities and natural resources funds were leading the performance tables, we noticed. To some extent they we were playing catch up, having lagged the rally in markets since the lows of March but we have also seen some marked discount narrowing as share prices re-rate and close the gap to their net asset values (NAV).
The laggard in the sector, and the worst-performing of all investment companies in July in price terms, which I wrote about last month, is Riverstone Energy (RSE). The oil price does seem to be on an upward trend, Brent crude has more than doubled from its low point in April and the recovery in the WTI is even more dramatic.
Nevertheless, while many Gulf of Mexico wells will make money at these levels, most US shale wells are still not profitable. This is especially true if production has been halted for a while and money needs to be spent to get the well flowing again. There is an Opec meeting later this month and always the possibility of a positive surprise but the forecast is for production to edge up again.
However, at the top end of the performance league table for net asset value (NAV) growth sit Geiger Counter, Golden Prospect and CQS Natural Resources Growth and Income. All three are managed by CQS-owned New City Investment Managers but with quite different strategies.
Geiger Counter (GCL) is a play on… read more here