Stephen’s Posterous

In his letter last week to Berkshire Hathaway (BRKA) shareholders, Warren Buffett took himself to task for more than quadrupling the firm's stake in energy giant ConocoPhillips (COP) last year.

"The terrible timing of my purchase has cost Berkshire several billion dollars," Buffett wrote. Buffett may have got the timing wrong, but it might be wise to take his advice also contained in the annual letter: "Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."

Right now, shares of ConocoPhillips, hovering near their five-year low, are an attractive way to play an eventual rebound in crude-oil and natural-gas prices. The company's above-average exposure to natural gas compared to its peers could drive returns in an economic recovery that would also boost the lagging commodity.

The stock is trading at a sharp discount based on several valuation metrics. Shares are valued at 0.6 times book value whereas Exxon Mobil (XOM) and Chevron (CVX) are trading at 2.6 and 1.4 times, respectively.

The dividend, yielding 5%, offers stable returns in this volatile market. Lee Delaporte, director of research at Dreman Value Management, says ConocoPhillips is his firm's largest holding for a very simple reason: It is a large, diversified energy company that is also "one of the cheapest in the energy space."

"I think from a long-term perspective that I'm going to get a better return over time in a ConocoPhillips" as the valuation gap narrows, Delaporte says.

"ConocoPhillips shares outperformed the major integrated companies every single year from 2003 through 2007 and by a wide margin, not by one or two points," says Fadel Gheit, managing director at Oppenheimer. That stellar track record came to an abrupt end in 2008: ConocoPhillips fell 41%, versus the major integrated group's 30% decline and the Standard & Poor's 500 index's 39% drop during the year.

Gheit, who also was optimistic about ConocoPhillips and other integrated oil companies early last year, admits, "Warren Buffet and I made a mistake. I never thought that [oil and natural-gas] prices would collapse the way that they did and stay the way they did, but obviously you live and learn."

A rebound in oil to at least $55 a barrel and natural gas to $6 per million British thermal unit "will make this stock very cheap," Gheit says. The market is valuing ConocoPhillips' oil reserves at $9.46 a barrel versus the group average of $11.11.

ConocoPhillips stock typically trades at a discount to its peers. That's because the company has a history of making untimely acquisitions at the top of the market. In the fourth quarter, the company took a whopping $34 billion write-down largely for its acquisition of Burlington Resources in 2005 and a 20% stake in Russian oil giant Lukoil in 2007.

This is a noncash accounting charge, but "the slate's been cleaned and when gas prices recover, it's going to be positive for them," says Dreman's Delaporte. Even so, the company built its way into the group of major integrated oil companies and commands an impressive reserve base with attractive long-term growth opportunities, such as developing liquefied natural-gas facilities in the Middle East.

ConocoPhillips has cut spending and halted its stock repurchases so that it can essentially live off of cash flow. The company ended 2008 with $755 million in cash compared to $35 billion at Exxon and $24 billion at Chevron.

As the "junior member of the elite club," Gheit notes that ConocoPhillips is more susceptible to shocks -- such as Venezuela's move to nationalize reserves in 2007. Its large exposure to volatile natural gas (40% of production) has been a drag in the downturn, but the upside potential from here is significant.

Oil and natural-gas futures fell 70% from last July's peak to trough a few months later, but the 9% rebound in natural-gas prices has lagged the 33% recovery in oil, says Gheit. "I think oil prices will go higher and gas will be catching up." This would also improve margins. ConocoPhillips' profits fell to $8 a barrel of oil equivalent in the fourth quarter from $24.40 in the third quarter, wrote Barclays Capital analyst Paul Cheng in a Jan. 29 report.

Earnings are expected to drop from $10.66 in 2008 to $4.03 in 2009 before climbing to $6.03 in 2010, according to Thomson Reuters.

Margins for producing gasoline and other oil products have improved as refiners slashed production to match demand. So this refining component "will be helpful in this particular period rather than be hurtful," says Carlton Neel, portfolio manager at Virtus Investment Partners/Zweig Advisers. Refining and marketing operations make up about 20%-25% of revenues.

The company is holding an analyst meeting on March 11. At its current price, we suspect that Warren Buffett's excitement for the stock could be rekindled.

Source.

Missing among the dozens of articles about how ExxonMobil on Friday broke its own record of being the most profitable company on the planet was any mention of the billions it could have made but did not.

It was easy for an energy executive to look like a genius during the bull market in oil and gas prices that peaked last summer. Nearly every project was a winner, but Exxon’s executives applied a far higher hurdle rate, choosing to generate free cash flow as others invested. Some shareholders chided them for their conservatism. Added to this was sniping from environmentalists for failing to embrace green technologies to the same extent as some of its peers and by irate motorists for simply making so much money. Love them or hate them, Exxon’s bosses navigated the energy boom superbly and are now well positioned to make the most out of the bust.

Last year they returned $40.1 billion to shareholders through buybacks and dividends or 154 per cent of their capital investment and exploration spending. This is in sharp contrast to fellow supermajors. Royal Dutch Shell returned just 37 per cent of expenditures to shareholders. BP and Chevron were at 61 and 67 per cent, respectively, while ConocoPhillips was the next most prudent at 87 per cent.

Meanwhile, the credit crunch has left some mid-tier oil companies poorly prepared to develop promising fields as internally generated cash flows slump. North American oil and gas companies now sport valuations that assume oil prices of $52.50 a barrel in perpetuity, according to Tudor Pickering & Holt.

By contrast, equilibrium prices may be closer to $80, says the International Energy Agency. With big projects still elusive, these valuations have spurred talk of Exxon expanding reserves through acquisitions rather than the drill-bit. Like a value investor, it was fearful when others were greedy and now has the cash to be greedy when others are fearful.

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The global downturn has hit national oil company share prices much harder than their international oil company counterparts, according to a study. Research by PFC Energy, a US consulting group, warns that the sharp decline in share prices could lead to a perilous shortfall in investment for some of the world’s oil and gas-rich nations.

The share prices of companies part-owned by the governments of Russia and China have been particularly affected by the downturn as have those of Petrobras, Brazil’s national oil company. National oil companies’ shares have declined 64 per cent over the year as investors who had been attracted by their potential value started to favour companies with a sure cash flow, said Antonia Bullard, lead author of the study.

Robin West, chairman of PFC, which each year ranks the world’s largest 50 energy groups by market capitalisation, said the the downturn in the oil services sector and national oil companies could have far-reaching consequences.

“Their losses will affect the long-term capacity and ability of the industry to respond to any pick-up in demand as the economy recovers.” The International Energy Agency, the consuming countries’ watchdog, believes the industry will need to invest $350bn each year to maintain oil and gas supplies.

It has already warned that national oil companies, in particular, may not invest adequately, especially as they face a deteriorating economic environment. PFC’s study paints a stark picture of the loss of dominance by the national oil companies.

Not only has ExxonMobil of the US regained the top slot from PetroChina, but no fewer than three national oil companies – Petrobras, Gazprom and Sinopec – have slipped out of the top six. They now occupy ranks nine, 11 and 12, respectively.

Overall, international oil companies, which have the most varied portfolio of the industry – dabbling in refining and petrochemicals, liquefied natural gas, and alternative energy, among other sectors – averaged losses of 34 per cent. ExxonMobil’s shares dropped 15 per cent, while Gazprom’s dropped 74 per cent, giving it a market cap of $83bn, compared with $332bn at the end of 2007.

US president Barack Obama has promised to tackle climate change at home and abroad. How could this affect the world’s biggest energy groups?

Every year PFC Energy compiles a ranking of the world’s top energy companies by market capitalisation. View the full top 50 ranking of the world's biggest energy companies. Source.

In a challenging 2008 for stocks, big oil shares have provided some respite rising through midyear before losing ground as petroleum prices slid from the astounding peak around $147 a barrel that they hit in July.

With crude more than $100 below that level, shares of the integrated oil giants, companies that do everything from exploring to producing to refining and distributing, remain in a slump. These stocks look tempting for long-term investors, but there's no need to rush. Big oil stocks could get even more tempting in coming weeks as the companies report earnings, issue subdued guidance for 2009 results and reduce the value of their reserves to reflect the latest realities of crude pricing.

The U.S. Energy Information Administration expects oil to average about $43 a barrel in 2009, while some Wall Street energy bulls consider $60 more likely. If either forecast is right, oil stocks will benefit later this year. If on the other hand, crude slides below its current level, as some Street bears expect, the shares could stumble further.

A recovery will eventually come, and higher oil prices surely will follow. The most enthusiastic bulls even see them returning to $100 within a few years. Patient investors would do well to buy the stocks of the best-positioned companies with the strongest finances and best long-term outlooks and this includes: ExxonMobil, Total and BP. Also worth considering, although more speculative: Petrobras.

Of the top three, ExxonMobil (XOM) looks the most expensive, but its strong cash position makes it the No. 1 candidate for a dividend increase. The company, the world's largest non-government-owned energy outfit, is also a low-cost petroleum producer, as are France's Total (TOT) and the U.K.'s BP (BP), each of which also has impressive natural-gas holdings. Brazil's Petroleo Brasileiro, known as Petrobras (PBR), a smaller, production-heavy player, has made some intriguing energy discoveries, but some can't be exploited profitably at current petroleum prices.

The story is not as positive for the other big players, whose shares are cheaper for good reasons. Although it has a decent cash position and dividend, Royal Dutch Shell (RDSA) trades at a discount to its peers, in part because of its miserable history of writing down the size of its reserves. ConocoPhillips (COP) has a weaker balance sheet than most of its rivals, leaving it at a disadvantage in bidding for assets to replace its maturing reserves. And Chevron (CVX) looks downright expensive, especially in light of its high reserve-replacement costs.

The challenge for the publicly traded global giants is replacing their oil and natural-gas fields on a massive scale. National oil companies, chasing profits, now control about 80% of the world's oil. As energy prices rose, ExxonMobil and ConocoPhillips were among the companies booted from nationalized projects, most notably in Venezuela.

The political realities have forced the majors to do much of their exploration in difficult terrain, where finding-costs are high. The good news is that oil-rich countries seeking to fill growing budget holes are likely to offer more attractive terms to the majors, says Daniel Yergin, an energy expert and the author of The Prize, an oil-industry history. The inducements: the majors' access to capital and ability to execute projects and to marshal technology.

The major, independent energy companies still can thrive with oil prices down because they are "so big and diverse, they benefit in the chemical and refining areas from a drop in prices...," says Sean Bogda, a money manager at Global Currents, a unit of Legg Mason.

One big bull on the sector is Tim Guinness, who runs the Guinness Atkinson Global Energy Fund (GAGEX). He contends that all the integrated oil stocks are a "screaming buy" with more than 50% upside, if you believe, as he does, that petroleum prices will average $60 in 2010 and $70 in 2011. The money manager's argument: The Organization of Petroleum Exporting Countries (OPEC) wants $70 oil and ultimately will take the actions necessary to obtain it, even if its members have an interest in "giving the world an economic break" with lower prices for now.

One threat overhanging all of the oil companies is the possibility that the Democrat-controlled Congress will revive the windfall-profits tax of the 1980s. But just how deeply such a levy would bite into earnings and whether it really would be imposed are both unknowns at this point.

Bears also fear that dividends will fall unless crude and natural-gas prices heat up. But, says Jeff Parsons, an energy analyst at Eaton Vance Management: "Integrated oil companies, even if they have a downturn in cash flows, rarely cut the dividend-they try to maintain or grow it. What they can do is reduce their capital expenditures." In fact, capex budgets are shrinking already, in line with oil prices.

ExxonMobil

This company is in a league of its own, not just for its girth and $37 billion cash stash, but for its low reserve-replacement costs -- born of many accessible energy fields and superior technology -- project-financing capability and a shrewd but conservative management team. Headed by CEO Rex Tillerson, Exxon's management gets consistent praise on Wall Street.

This is why Exxon investors have long paid a premium multiple, which today stands near 14 times estimated 2009 earnings of $5.51. That's a roughly 10% premium to the integrated oil sector, but well below the 30% the stock boasted last year. Exxon shares have been the most stable among those of the big energy firms, down only 6% over the past 12 months. In contrast, its 2% yield is the lowest among the integrated giants. But, given the company's powerful financial position, bulls argue that it's likely to boost its payout, after having emphasized repurchases in recent years.

Exxon spent $26.9 billion in 2008's first nine months, shaving its total of outstanding shares by 5.5%, to roughly five billion. The company has repurchased more than 2 billion shares over the past decade. If the buybacks were to continue apace, Deutsche Bank analyst Paul Sankey has quipped, ExxonMobil could be a private company by 2020.

ExxonMobil didn't respond to a request for comment. It noted in third-quarter filings, however, that dividends rose 13% per share in 2008's first nine months -- largely the result of fewer outstanding shares. Recently, speculation has grown about whether ExxonMobil will make an acquisition. Among the rumored targets are Britain's BG Group (BG.U.K.) for its natural-gas assets. There has even been talk of a bid for all or part of Royal Dutch Shell, a deal that would face regulatory hurdles.

Total

This big French energy company's outlook is being brightened by the appeal of liquefied natural gas, especially outside the U.S. Standard & Poors expects the company's natural-gas reserves to be significantly bolstered by a recent agreement with Russia's Gazprom. Under it, Total obtained a 25% interest for 25 years in a Barents Sea gas field that the two will exploit together.

Unexpected shutdowns in Africa and the North Sea cut production last year, but European refining margins were up 88% in the third quarter alone. With low-cost production in Africa (the source of 42% of Total's earnings before interest and taxes, according to S&P), and rapid expansion in the Middle East, Total should thrive if oil prices stay at current levels or rise. The French major had $17 billion in cash at the end of the third quarter. S&P has a 12-month target of $92 on the stock, double the current price.

BP

In recent years, BP has blitzed consumers with clean-energy ads and expanded its natural-gas operations, especially in the U.S., where last fall it agreed to pay $3.7 billion for some of Chesapeake Energy's shale assets.

But oil still looms large in the company's fortunes, and its earnings are likely to be hurt in the near term by low crude prices in Russia, where a joint venture accounts for about a quarter of production. In addition, profits could be squeezed by the restructuring of BP's considerable refining operations, including its Texas City, Texas, operation, the third largest in the U.S. Chief Financial Officer Byron Grote has said that BP's $3.36-a-year dividend isn't endangered, assuming oil stays in the 40s. Investors obviously are skeptical, however; the company's shares are off about 11% this month.

Petrobras

This Brazilian energy concern's shares have fallen about 50% in the past 12 months. While considerably smaller and less diverse than some of the other integrated outfits, Petrobras has crashed the Big Oil party because of a huge discovery under salt deposits deep off the coast of Brazil. The costly project will take years to come to fruition, and some analysts contend that it might be viable only if oil fetches $60 a barrel; the company says the real figure is closer to $40.

The uncertainty over this important discovery makes Petrobras more of a gamble than ExxonMobil, Total or BP, especially since it sells at a higher valuation than any of them. In addition, the Brazilian government, which controls about a third of Petrobras shares, has encouraged the company to return more profits as dividends. Petrobras now yields 3.7% -- a number that's likely to rise slightly this year. One possible drag: higher taxes on oil profits by the Brazilian government. As for Petrobras stock, Deutsche Bank cut its target to 35 in December. But that's still well above the recent 24.29.

Royal Dutch Shell

Natural gas has become a more attractive fuel because it burns relatively cleanly and can be transported easily in liquefied form. Royal Dutch plans to double its liquefied natural-gas capacity by 2010, according to S&P. That includes a large Russian LNG project to be completed this year. Offsetting this is that, if oil prices don't rise from current levels, profits will fall at Royal Dutch's high-cost Canadian oil sands operations.

In January 2004, before Royal Dutch Petroleum and Shell were unified under one U.K. parent company (resulting in a confusing batch of tickers), Shell was forced to remove billions of barrels of "proven" reserves from its books, resulting in huge financial restatements. Criminal investigations yielded nothing, and the whole mess is history, but its legacy endures in investors' skepticism about Royal Dutch's management. That might change a bit after the company's well-regarded chief financial officer, Peter Voser, takes over as CEO this year.

Royal Dutch Shell's A shares, which underlie its most active American depositary receipts, carry the lowest multiple among the big oil stocks, even though the company has more than $8 billion in cash and offers a nearly 7% dividend yield.

ConocoPhillips

This company, whose stock could rally as its low multiple attracts investors, has the highest exposure among the super-majors to the North American natural-gas market.

It also has one of the most capital-intensive portfolios among the U.S. integrated energy outfits. Unless natural-gas prices this year exceed $7.50 per million British thermal units, well above the current $4.70 or so, the stock has only modest potential upside this year, writes JPMorgan analyst Michael LaMotte, who has a 12-month price target of $53. The shares now are in the high 40s.

Chevron

Shares of this company, which acquired Unocal in 2005, held up relatively well in 2008; they're down 14% over the past 12 months. LaMotte upgraded the stock earlier this month to Overweight, saying that with a higher percentage of crude production, compared to Exxon or ConocoPhillips, Chevron "can move more than the peer group on crude-price movements."

While it has far-flung exploration and production projects, from those on land in Saudi Arabia to deepwater Nigeria, it also is searching for oil in deep areas of the Gulf of Mexico, where hurricanes hurt production last year. LaMotte has a target price of $95 on the stock, for an upside of 36%.

Not everyone is a fan of this stock, however. After Chevron released an interim fourth-quarter report showing that refining margins were down, Credit Suisse lowered its earnings estimates, reiterated its Neutral rating and maintained its $68 price target. The shares were around 70 at midday Friday.

In sum, the long-term picture for Big Oil is generally bright. But, given the differences in the companies' strengths and prospects, investors will have to be picky to find the biggest winners. And winners there will be, because despite the hopes of environmentalists and foes of Big Oil, it will be years before conservation and alternative-energy sources can slake much of the world's thirst for petroleum.

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The steepest plunge in crude prices on record may be setting up oil investors for a rally this year, if history is any guide. The so-called forward curve of futures contracts traded on the New York Mercantile Exchange suggests oil will rise 28 percent to $60.10 a barrel by December. The curve looks almost the same as 10 years ago, after Russia’s default and the collapse of the Long-Term Capital Management LP hedge fund raised concerns that a global economic slowdown would reduce energy demand. Crude prices fell 25 percent in the final quarter of 1998, the steepest drop in seven years.

Bets on a recovery paid off then as the Organization of Petroleum Exporting Countries (OPEC) cut production 6.9%, causing prices to more than double in 1999. Now, OPEC is pledging to reduce supply 9%, companies from Royal Dutch Shell to Valero Corp. are postponing new energy projects and central banks are cutting interest rates to end the worst financial crisis since World War II.

“The world economy will get into a more stable environment most probably in the second half of next year,” said Christoph Eibl, who helps manage more than $1 billion at Tiberius Asset Management AG in Zug, Switzerland. “Commodities are thus due for a rebound. Crude oil has the best potential.” Eibl’s Absolute Return Commodity Fund gained 7.5% last year in part by betting on agricultural commodities and industrial metals. He beat the Standard & Poor’s GSCI Index of 24 commodities, which dropped 43%, and oil, which fell 54%. A 30% gain this year would be the most since the 57 percent jump in 2007.

Traders are already taking advantage of prices in the forward market exceeding those for immediate delivery, a so-called contango. About 26 million barrels of oil may be stored in tankers until later in the year. The crude, valued at $1.2 billion at today’s prices, will be worth $1.57 billion based on December contracts, potentially locking in a profit for investors after expenses for financing, storing and insuring the oil. Crude for February 2009 delivery traded at $46.89 a barrel at 9:50 a.m. in London on January 5, 2009, compared with $60.10 for the December 2009 contract. At the end of December 1998, oil for February 1999 was at $12.05, compared with $13.78 for December of that year, a difference of 14%. Twenty-eight of 30 analysts tracked by Bloomberg forecast higher prices by the end of 2009, with a median fourth-quarter estimate of $70.

Adam Sieminski, the chief energy economist at Deutsche Bank AG in Washington, is the most bearish. He said in December 2008 that oil will trade at $40 in the fourth quarter, almost 14% lower than the Jan. 2 close, data compiled by Bloomberg show. Slowing economies may cut demand by about 700,000 barrels a day this year, he said.

“While commodity prices have fallen sharply from their July 2008 peaks, I see a further 15 to 20 percent downside risk for commodities into 2009 and maybe a recovery of those prices only toward the end of the year if there are signals of a global economic recovery,” said New York University Professor Nouriel Roubini, who predicted the global financial crisis. The duration of the slowdown remains the biggest risk to a rebound in raw materials. Japan, the world’s second-biggest economy, may not return to growth until the fourth quarter, while the euro-area will shrink through this year, according to Bloomberg surveys of economists. Oil rallied in 1999 as OPEC reduced output by 1.71 million barrels a day, equal to what is pumped today by Libya, the largest producer in North Africa.

The group reduced supplies after Russia’s default in August 1998 sparked concerns about a meltdown in financial markets and Long-Term Capital Management’s $4 billion loss in leveraged trading strategies forced the New York Fed to organize a rescue of the fund by 14 banks and securities firms. Last year was even worse. Commodities prices fell the most in five decades as crude dropped more than $100 from the peak of $147.27 in July. Losses and writedowns at financial firms rose to hundreds of billions of dollars and simultaneous recessions hit the U.S., Europe and Japan for the first time since World War II. The Standard & Poor’s 500 Index tumbled 38 percent and about $29 trillion of global equity market value evaporated.

The combination of central banks pumping trillions of dollars into the global financial system and OPEC’s resolve to stop the plunge in crude is making investors more bullish. OPEC is “determined to bring stability to the oil market,” Saudi Oil Minister Ali al-Naimi said Dec. 21 in London, and Saudi Arabia’s King Abdullah said in November that $75 was a fair price. That month his nation cut output by 3.2%, the most since April 2006, data compiled by Bloomberg show.

OPEC will reduce daily crude shipments by 1% in the four weeks to Jan. 17 as the group enacts the supply cuts it agreed in Algeria last month, according to industry consultant Oil Movements. The Federal Reserve cut its benchmark interest rate to as low as zero for the first time and the incoming administration of President-elect Barack Obama will seek as much as $850 billion in new spending and programs, congressional officials have said. China unveiled a 4 trillion-yuan ($585 billion) economic stimulus plan in November and European Union leaders are drawing up packages worth about a combined 200 billion euros ($278 billion).

The U.S. economy will shrink 2.4% this quarter, following a contraction of 4.35% in the three months that just ended, according to economists surveyed by Bloomberg. The world’s biggest oil consumer will contract 0.5% in the second quarter before expanding 1.3% and 1.8% in the next two quarters, the forecasts show.

“Once these economies kick in again with the money supply pouring into these economies, everybody is going to be caught short with no inventory of these commodities and then commodity prices will move up again,” said Mark Mobius, executive chairman of Templeton Asset Management Ltd. in Singapore, who oversees about $26 billion in emerging-market stocks. Oil tumbled almost $115 a barrel from its July record. Pump prices for gasoline in the U.S. that peaked at an average $4.165 a gallon are down to $1.67 nationwide, according to the Energy Department.

“Low prices in themselves do not normally create demand for commodities but for oil they do,” said Tim Mercer, chief investment manager at Hong Kong-based hedge fund Musahi Capital Ltd. Should the economy recover this year, “$80 to $100 oil is quite possible,” he said. World oil consumption will increase by 400,000 barrels a day, or 0.5 percent, to 86.3 million a day this year, according to the Paris-based International Energy Agency. Oil demand in 2008 fell for the first time since 1983, the IEA estimated.

A rebound would reward everyone from Irving, Texas-based Exxon Mobil Corp., the world’s largest publicly traded company, to Saudi Arabia, the biggest producing nation. The Persian Gulf state’s budget drops into a deficit at prices below $50 a barrel, according to Fitch Ratings. Until prices improve, oil companies are delaying investments and shutting plants, threatening to reduce supply further. Shell, based in The Hague, postponed a decision to expand its Athabasca oil-sands project in Canada. Valero Energy, the largest U.S. refiner, said in October it will defer projects to cut spending by about $500 million, or 17 percent.

ConocoPhillips agreed to halt bidding for a planned 400,000 barrel-a-day export refinery in Saudi Arabia because of falling prices. The recovery in oil will pace at least a 20 percent return from commodities in 2009, Tiberius’s Eibl said. Futures contracts signal at least a 10 percent appreciation in corn and wheat on the Chicago Board of Trade and a 12 percent gain in cotton. Copper on the London Metal Exchange will lag behind, while gold is likely to end 2009 little changed, futures show.

“The dollar is going down,” said Jim O’Neill, chief economist at Goldman Sachs Group Inc. in London. “If that’s right, gold is definitely going to continue its recent recovery and I think that might give some support to oil prices as well, despite the weak fundamentals.” The U.S. Dollar Index traded on ICE futures in New York, which tracks the currency against six others, advanced 6 percent last year, the best performance since 2005. Source.

How to Profit From Oil's Comeback by Naureen S. Malik

Oil and baseball--namely the Yankees--are two passions that are remarkably similar for Fadel Gheit. While he makes his living off the first and is an avid fan of the second, the managing director of energy at Oppenheimer says both markets are subject to the "bubble." Crude-oil prices have collapsed and salaries by baseball's A-listers could be next?