Playing Crimea: should you be shorting oil and gas stocks right now?

Playing Crimea: should you be shorting oil and gas stocks right now?

Research  these Stocks on Kapitall’s Playground Now

 
research now

Russia's annexation of Crimea is creating headaches for investors in oil and gas stocks worldwide.

Russian President Vladimir Putin didn't wait long after his Olympic Games to start stepping on Western toes. Less than a month after Sochi's resolution, Putin's annexation of Crimea seems all but complete

Some Background

Located on a peninsula between Russia and the Ukraine, Crimea is a gateway between East and West. It's where FDR, Winston Churchill and Stalin met to discuss post-WWII boarders, and in the wake of the Cold War it became the gateway between increasingly liberalized former soviet republics and mainland Russia. 

Its mostly Russian population voted overwhelmingly to approve incorporation with Russia last week. That would have made this issue pretty cut-and-dry. Crimea is mostly Russian, and wants to be subsumed by Russia. Let Democracy do its thing, right?

Except in 1994, the US and the UK signed a treaty pledging to help preserve Ukranian sovereignty and the integrity of its borders. Which basically means that on one hand you have the will of the Crimean people, and precariously balanced on the other hand are most of the precedents that make up international law. 

No wonder people are having trouble figuring out what to make of it.

Read more about investment plays on the crisis in Central Europe.

Investing Ideas

Russia's not a manufacturing economy like China, nor are they a big service or technology innovator like the US. Their economy is mostly built around exporting raw-materials and huge amounts of oil and gas to foreign buyers.

This makes finding value plays on the Russian stock market hard, as so much of Russia's economy relies on commodities prices which are by nature unpredictable. If you thought that sanctions were likely to intensify you could look for short opportunities in Russia's stock market and currency, but the valuations there are already super low. 

One interesting way to play Russia might be by looking at natural gas. Gaining leverage on Russia could be a powerful enough reason to get Congress to reverse its export ban, which would be huge for the US natural gas industry. If European Union member states de-regulate the practice, an energy boom similar to the shale boom in US could be on the horizon. 

Futher sanctions against Russia will almost certainly harm Russia's major oil conglomorate Gazprom (OGZBY), as well as its partner companies like BP (BP). However, the oil supply line is so complex and interconnected it's hard to find winners and losers, and the confusion has brought the whole sector down.

To find clues we built a list of 7 stocks that are experiencing noteworthy spikes in short-selling, of at least 1% of the entire float. This means that more investors are making bets that the company's stock price will go down. 

Click on the interactive chart to view analyst ratings over time. 

1.Comstock Resources Inc. (CRK, Earnings, Analysts, Financials):Engages in the acquisition, development, production, and exploration of oil and natural gas properties in the United States. Market cap at $984.24M, most recent closing price at $21.32.

Shares shorted have increased from 8.25M to 9.31M over the last month, an increase which represents about 2.39% of the company's float of 44.29M shares. Days to cover ratio at 8.03 days.
 

 

2.Goodrich Petroleum Corp. (GDP, Earnings, Analysts, Financials):Engages in the exploration, development, and production of oil and natural gas properties. Market cap at $585.92M, most recent closing price at $13.86.

Shares shorted have increased from 10.50M to 11.36M over the last month, an increase which represents about 2.53% of the company's float of 34.00M shares. Days to cover ratio at 5.49 days.

 

 

3.Swift Energy Co. (SFY, Earnings, Analysts, Financials):Engages in developing, exploring, acquiring, and operating oil and natural gas properties in Louisiana and Texas. Market cap at $453.53M, most recent closing price at $10.45.

Shares shorted have increased from 14.70M to 15.89M over the last month, an increase which represents about 2.85% of the company's float of 41.74M shares. Days to cover ratio at 10.42 days.
 

 

4.Stone Energy Corp. (SGY, Earnings, Analysts, Financials):Engages in the acquisition, exploration, exploitation, development, and operation of oil and gas properties located in the Gulf of Mexico and Appalachia region. Market cap at $1.92B, most recent closing price at $39.41.

Shares shorted have increased from 3.61M to 4.62M over the last month, an increase which represents about 2.16% of the company's float of 46.75M shares. Days to cover ratio at 5.97 days.

 

 

5.SM Energy Company (SM, Earnings, Analysts, Financials):Engages in the acquisition, exploration, exploitation, development, and production of natural gas and crude oil in North America. Market cap at $4.75B, most recent closing price at $70.85.

Shares shorted have increased from 2.07M to 2.78M over the last month, an increase which represents about 1.08% of the company's float of 65.93M shares. Days to cover ratio at 2.4 days.

 

 

6.Ultra Petroleum Corp. (UPL, Earnings, Analysts, Financials):Engages in the acquisition, exploration, development, production, and operation of oil and natural gas properties in the United States. Market cap at $3.9B, most recent closing price at $25.48.

Shares shorted have increased from 34.41M to 35.94M over the last month, an increase which represents about 1.02% of the company's float of 149.91M shares. Days to cover ratio at 10.27 days.

 

 

7.EXCO Resources Inc. (XCO, Earnings, Analysts, Financials):Engages in the exploration, exploitation, development, and production of onshore North American oil and natural gas properties with a focus on shale resource plays. Market cap at $1.14B, most recent closing price at $5.27.

Shares shorted have increased from 39.80M to 43.99M over the last month, an increase which represents about 3.24% of the company's float of 129.28M shares. 

 

(List compiled by James Dennin. Analyst ratings sourced from Zacks Investment Research. All other data sourced from Finviz.)

Use Kapitall's Tools: Looking for ways to analyze this list?


Use this article snapshot as a launch pad: Simply click on the links, and use Kapitall's tab navigation to browse through the data…
 

Analyze These Ideas: Getting Started


Dig Deeper: Access Company Snapshots, Charts, Filings

ABOUT US

© Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC. 

Securities products and services are offered by Kapitall Generation, LLC - a FINRA/SIPC member. 

playthemarket640jpg

Leave a Reply

Protected by WP Anti Spam

playthemarket280jpg