Earlier this month the US Federal Reserve announced that it would be printing more money. That came as part of its second quantitative easing programme in two years. The move led to a rally in commodities.
This is all great news for Angelos Damaskos, the manager of the CF Junior Oils Trust. It has enjoyed a strong couple of weeks as a result of the rally. The Trust is up 30.7% year-to-date against a drop of 6.6% in the FTSE 350 Oil & Gas index over the same period.
“Regardless of volatility, we believe commodity prices remain on a long-term rising trend, driven by the industrialising East’s economic strength and continued growth,” says Damaskos, who has been running the fund since 2004. The rally saw the oil price briefly exceed $88.50 a barrel, but Damaskos doesn’t expect to see that repeated in the near future.
“Oil prices will probably remain range-bound for the next year to year and a half in the $85-$65 range”. He also believes any volatility within that range can be put down to financial speculation. But that doesn’t mean there isn’t still money to be made in oil.
The Junior Oil Trust specialises in finding smaller, undervalued energy stocks and taking a big stake in them. An example of how successful the strategy can be is Caza Oil & Gas. The fund has held the company since 2007, and what started out as a small part of the fund has turned into the fund’s biggest holding. The turnaround has happened after a successful drilling programme began to send the share price soaring. It is currently around 42p, yet Damaskos bought the stock for an average of eight pence a share.
CF Junior Oils Trust top ten holdings
| Name of holding | % of assets |
|---|---|
| Caza Oil & Gas Inc | 9.1 |
| Premier Oil | 6.3 |
| Encore Oil | 6.0 |
| Norwegian Energy Co SA | 4.5 |
| Dragon Oil | 4.5 |
| Bowleven | 4.3 |
| Bridge Energy ASA | 4.0 |
| Carnarvon Petroleum | 3.0 |
| North Energy ASA | 2.7 |
| Questerre Energy Corp | 2.7 |