Ruaridh Stewart, co manager of the Martin Global Energy fund, says the portfolio has upped its exposure to oil refining stocks as he and co-manager Duncan Goodwin have become optimistic about the sector’s prospects.
Stewart (pictured) says the oil refiners have performed poorly for the past few years but there has been evidence of positive change. in the last two-to-three months.
“A collapse in margins has led to a tightening in supply and equity valuations are now discounting unsustainably low margins in many com- panies,” says Stewart. As a result, he says, the £40m fund has started buying selectively into the sector, adding Saras, an Italian refiner, and the Swiss-listed Petroplus.
Stewart says the timing of the fund’s launch proved a bonus and has helped propel performance early on. According to Lipper the fund has returned 13.8% since launch to August 31 against the MSCI ACWI Energy index rise of 11%.
One stock which aided this performance was Petrofac, a UK-listed oil service company, which Stewart says has seen its share price rise 174% year-to-date.
“We launched the fund with a long-term view that energy equities were a good place to be,” says Stewart. “While in the short-term oil looks fairly well priced, on a two-to-three year view we are bullish on the outlook because when demand recovers we should see a sharp rebound in oil prices.”
Stewart is also bullish on the prospects for deep water services and engineering construction companies.