Q: Hello team,
With today’s announcement of the strait open for business , should a person now be selling oil stocks to put into other growth names? Or trim? I currently hold a 6% weighting in wcp and a small amount of cve . Both of which are down big today already with the news.
Thanks ,
Shane
With today’s announcement of the strait open for business , should a person now be selling oil stocks to put into other growth names? Or trim? I currently hold a 6% weighting in wcp and a small amount of cve . Both of which are down big today already with the news.
Thanks ,
Shane
5i Research Answer:
It is true that the opening of the Strait of Hormuz would meaningfully reduce pressure on oil prices in the near term. However, we believe that within the $70–$80 range, most oil companies will continue to do just fine with record profits and cash flow. If investors are uncomfortable with the near-term volatility, we think trimming the position slightly could make sense but not necessary. Some of the open/close volatility is likely to continue for a bit longer.