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Portfolio Holdings



Thank you for your interest and support for Celsius Energy. This page displays my live oil & natural gas holdings. The portfolio primarily uses a high-risk, high-reward strategy utilizing leveraged ETFs to capitalize both on over- and under-valuations of each commodity versus their respective Fair Price as well as underlying defects in the ETFs themselves inherent in the leveraging process. The portfolio also often holds smaller stakes in oil & gas producers, midstream partners, exploration companies, and LNG & crude oil tanker companies to balance risk. The portfolio updates near real-time during market hours with new trades and quote data. A trading outlook and discussion is issued on Sunday afternoons and Wednesday mornings with a specific focus on my portfolio holdings and trading strategy for the current week.


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Monday Trading Outlook & Discussion

Oil & Natural Gas Stabilize As Late Week Rally Boosts Portfolio Gains to Over 9% Since May 1; Natural Gas Remains Undervalued & Good Low-Risk Entrypoint At Current Levels


Monday, June 26, 2017
Things were looking rather dire mid-week for my oil & natural gas portfolio. Natural gas dropped 5% out of the gates on Monday and crude slid to a 9-month low on Tuesday, bringing portfolio gains since May 1 to under 8% and dropping the portfolio into the red for the month of June. Thereafter, however, both oil and natural gas steadied and with each trading flat or slightly higher each of the last two days, particularly on Friday when both were up over 1% on the day. For the week, my Oil & Natural Gas Portfolio lost 1.4%, but aggressively cut into early week losses, boosting gains since May 1 up to 9.1% and returning the portfolio to the black for June. It was a light trading week with only two trades. On Monday's sell-off, I added to my natural gas long position under $2.90/MMBTU via short DGAZ, boosting my short position to 20% of my holdings (although, once again, net long natural gas exposure is just 13% since my "maintenance" short position in UGAZ intended to capitalize on leverage-induced and contango-induced losses in the long term stands at around 7% of my holdings). My second trade was to close out my entire CHK long position at $4.90/share for around a 4% on Tuesday once oil broke down. This turned out to be a good decision as the stock closed Friday at $4.57/share. My largest position remains cash.


Looking to the week ahead, I continue to feel cautiously confident in my natural gas long position. According to my Fair Price model, natural gas is undervalued across all timeframes including based on current inventories alone (4.6% undervalued) and based on 8-month projections (2.6% undervalued). I calculate that the commodity is undervalued by 4.0% averaged over the entire 8-month period. Furthermore, unlike during the winter, there tends to be a negative feedback mechanism during the summer in which cheap natural gas prompts increased natural gas share of cooling demand that in turn tightens the market leading to increased consumption and higher prices, which can manifest over a rather short timeframe. The opposite, of course, can happen should prices become too expensive. I feel that unless the entire summer is expected to be unseasonably cool (which 2017 is not), cold snaps such as the one we are currently experiencing present good buying opportunities long-term both for an eventual reversal as temperatures normalize and due to the increased volatility and whipsaw action that can stimulate leverage-induced decay. The only factor that is limiting my aggressiveness with this trade is rising domestic production which has been at or above year-ago levels for the past three weeks, although it appears to be stabilizing. While not enough to derail my bullish thesis, I will be keeping a watchful eye on supply going forwards. Given my short-3x leveraged ETF position that should benefit from volatility and its associated leverage-induced decay, I am satisfied with choppy road to get to higher prices. For this reason, should natural gas trade lower in the upcoming week, I will look to continue to accumulate a natural gas long position with a target net long position size of 15%-20% of my portfolio. While I may consider adding slightly to my DGAZ short position, leveraged short positions can be highly combustible should the trade break the wrong direction, as I mentioned last week, and I typically try to limit the position size of these products to 15% of my holdings (net exposure, of course). For this reason, future additions will likely also include either buying UNG or shorting the less volatile 2x product KOLD. Should natural gas instead rebound, I am targeting a price of $3.10-$3.20/MMBTU--which would bring natural gas to near its Fair Price--to begin taking profits on the trade.


I continue to hold a long oil position via short the 3x leveraged inverse ETF DWT that is my second largest position (though by a large margin) at 7.6% of my holdings. This position has been devastated by the crude oil sell off and is down 39%. I continue to believe in oil's long term prospects--as well as the benefits of leverage-induced decay should oil chop around at these levels for a while--and have no immediate plans to cover. However, I also have no intention to add to this position at this time. My two equities positions--long LNG and short BTU--continue to perform well, up 12% and 7% respectively. I will continue to hold these long-term positions with no plans to take profits or accumulate further. My largest holding, by far, remains cash at a massive 54% of my holdings. I continue to feel that caution is the better part of valor in this trading environment and will continue to emphasize the importance of being on the sidelines when necessary. That said, I will consider deploying some of this cash pile to long natural gas, as discussed above, or even to some beaten down, heavily shorted oil & gas names such as APA or CLR, or even back in CHK should prices fall further and offer a better entrypoint.


Disclaimer: Current Portfolio Holdings are released by Celsius Energy as experimental products. While they are intended to provide accurate, up-to-date data, they should not be used as trading recommendations nor should they be used alone in making investment decisions, or decisions of any kind. Celsius Energy does not make an express or implied warranty of any kind regarding the data information including, without limitation, any warranty of merchantability or fitness for a particular purpose or use.