Bison: Reliable Energy Research in a Rapidly Shifting Landscape
(Important Disclaimer at the Bottom)
Over the past year and a half, Bison has addressed energy topics in letters and white papers that are now appearing front-page news stories. With the increased prominence of these topics and strong performance of Bison’s analysis and associated investment theses, and with the end of the year approaching, it is timely to review and disseminate this record:
We are contrarians: Bison research often contradicts the consensus of news headlines, industry “experts” and other well-regarded market participants. Too often, consensus views are backed up by dated, incomplete, or politically tinged analyses. By addressing topics that are poorly understood, we capitalize on investment opportunities ahead of broader acceptance of new information and fundamental changes. In many cases, these changes are catalysts for misunderstood and undervalued securities to re-rate higher. However, investment ideas take time to unfold and there’s often some volatility along the way. Like a bison headed towards a storm, our research and analysis allows us to filter out the noise and remain focused on our investment strategy: buying and owning oil and gas companies with good assets, strong management teams and solid balance sheets at bargain valuations.
The Ongoing Energy Crisis Highlights the Need for Accurate Research
The global energy crisis continues to unravel, with record natural gas prices outside the US potentially contributing to the increasingly turbulent geopolitical landscape. In the US, political leadership is calling for more oil production from OPEC+ and for the release of strategic petroleum reserves to suppress rising gasoline prices. As Bison predicted in September, OPEC+ continues to show signs of limited spare oil production capacity, having posted October production results that leave much to be desired:
Ongoing energy supply shortages and continued energy market volatility currently brings, and likely in the future will bring, investment opportunities that are overlooked by the market. Having previously accurately analyzed topics that were poorly understood at the time of publication, we are well positioned to provide clarity. The record of our research is particularly timely with the increased prominence of formerly esoteric topics. What follows is a reflection on our research process and quantification of success to date.
Methodology for Qualifying Research Success:
To evaluate the success of past analyses, we classified the thesis in each white paper as either “correct” or “incorrect”, and then tallied the number of “correct” predictions to determine our hit rate. Specifically, we:
Defined the hypothesis or prediction presented in each paper
Identified the relevant benchmarks for each prediction or hypothesis
Measured the hypothesis target versus the benchmark through the lookback period, which we defined as the time of publication until November 1st, 2021
Below a summary of the ideas discussed in each white paper:
Results
Next, we observed the performance of the relevant benchmarks from the time of writing of each white paper until today:
On review, Bison’s analyses and forecasts have worked out over time. And while the latest white papers on OPEC+ spare capacity are still in process, we are optimistic, as evidenced by recent comments by an Ex Saudi EVP suggesting that OPEC+ has no more 3MM bb//d in spare capacity(in line with our estimates) and the cartel’s lacklustre production results for October.
Despite the accuracy and relevance of our research, we are disappointed to see it get comparatively little exposure. With the success to date, we remain confident that Bison’s research methodology is sound, and that we will continue to deliver timely, high quality, accurate content to our readers going forward. Our ask for now is simple: if you have enjoyed this research and find value from it, please share it with your friends and associates. And if you are reading this and have not yet done so, please go to www.bisoninterests.comand sign up for this newsletter.
Sources
https://bisoninterests.com/content/f/the-myth-of-opec-spare-capacity
https://www.bbc.com/news/business-59306223
Important Disclaimer: Opinions expressed herein by the author are not an investment recommendation and are not meant to be relied upon in investment decisions. The author is not acting in an investment adviser capacity. This is not an investment research report. The author's opinions expressed herein address only select aspects of potential investment in securities of the companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that potential and existing investors conduct thorough investment research of their own, including detailed review of the companies' SEC and CSA filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author's best judgment as of the date of publication and are subject to change without notice. The author and funds the author advises may buy or sell shares without any further notice.