While the 13-F filing data that shows institutional investment managers’ Q1’2012 capital allocations has not yet been submitted to the SEC, filings from previous quarters reveal a consistent trend. Money from all sectors is leaving the investment discretion of traditional equity managers, such as mutual funds, and rotating into sector-focused ETFs, bond funds, private equity and hedge funds. Q4’2011 13-F data from the top 100 actively managed investors, as measured by their equity assets under management, indicated that these investors decreased their dollar value exposure to every single macro sector even as this quarter witnessed an 11% rise in the S&P 500. During this period, energy experienced one of the steepest capital outflows of nearly $50 billion from the top tier of institutional investors.
However, within oil and gas, one area that has seen increased investor appetite is the downstream operators, mirroring this subsector’s vast outperformance in the stock market. The S&P 500 Oil & Gas Refining & Marketing Index surged more than 23% in Q1’2011, doubling the next-best faring sub-industry index, the Philadelphia Oil Service sector index, which surged 10% (and its counterpart, the S&P 500 Oil & Gas Equipment & Services index, only gained 2%). Meanwhile, the S&P 500 E&P index rose 6% despite the fact that Brent oil climbed more than +$17/bbl, or 14%, in the first quarter. Upstream-focused equities have underperformed Brent since early 2011 and analysts estimate that these stocks are pricing about $100/bbl crude oil, well below the current Brent price. By contrast, refiners have outperformed even as the planned reversal of the Seaway crude oil pipeline and weaker U.S. gasoline demand have compressed differentials.
For the full article, please email Tamar Essner at Tamar.Essner@thomsonreuters.com
Leave a comment