Chevron Texaco (CVX)

He just trimmed it on oil's move upward. 

It reports Friday. Will they take advantage of higher oil prices due to the war premium (Middle East conflicts)? They should.

Oil prices are higher mostly on fundamentals, but also on geopolitical tensions and some manipulation of supply by the usual suspects. Fortress balance sheet. Payout ratio only 43-44%. Great income stock. Ignore short-term noise on Hess acquisition. BRK has a very large holding in CVX, and they don't do anything lightly. Yield is 4.1%.

Oil has been choppy. Turmoil with purchase of Hess, though he likes the opportunity longer term. Tussle with XOM. Pristine balance sheet, very little debt, great dividend. Will do well with oil, profitable, just be patient.

Recent M&A not good for investors. Does not own shares in company. Disappointment on capital allocation in company. Would look elsewhere for energy sector investors. 

Earnings haven't been great and the PE has declined. Tough comps face energy stocks going into 2024. But M&A will be accretive to the major energy names. Don't buy an energy ETF, but choose energy names.

She sold Chevron to buy more SLB, which is the #1 player in oil field services. Traeds at 17x forward PE. They raised guidance three times this year, yet shares haven't moved. Their technology is not appreciation.

Took profits to rotate into sectors with higher beta. Oil stocks have come off with price of oil. Chart's been sideways, earnings disappointment. Longer term, likes the energy space with demand moving higher and supply cuts. 7.5% free cashflow yield, 4.2% dividend yield. He'd consider adding back into the portfolio.

Is skeptical that them buying Hess will double their free cash flow by 2027, but not without risk. Earnings were okay, 8.5% better than last quarter but lower than a year ago. Had owned this 11 years, but would buy on a pullback. The dividend is secure and growing.

Oil has been rallying due to geopolitics, rather than demand. That may be why oil stocks have lagged crude. CVX was up 7% in Q3.

There's been underinvestment in oil while the world demands more oil. Chevron had a solid quarter despite lower oil prices last quarter, but he expects higher prices ahead. One of his top holdings.

You need some exposure to energy, so she's sticking with this.

He added more recently. Permian production hit a record. Saudi Arabia wants to cut more oil and raise prices. Also, he's bullish China, because there's little downside going forward.