Contrarian? or Value Investor?

“What do you call someone who stands against street consensus that we’re already in a new Energy Bull Market?”

You call him Josef Schachter.

Schachter has been involved in the Investment Industry for over 40 years now and has experienced only two real Energy Bull Markets in all that time. While he believes there is a third vibrant five-year Energy Bull Market starting later this year, he says it has not yet begun. And while this is a contrarian view to street consensus, Schachter considers himself a Value Investor, conducting financial and technical analyses, having in-depth current knowledge of each company and the executives leading them, and an understanding of the impact that industry trends and global events have on the energy sector.

“We’re still in that turbulent bottoming phase as the bear market capitulates and before the bulls take over,” he says. “When investors realize this and some of the current speculative influences shift, as they already are, the companies we cover could easily become the five – ten baggers of the next cycle!” Schachter currently covers 29 energy and energy service companies for his publication the Schachter Energy Report.

As a regular keynote speaker at the World Outlook Financial Conference in Vancouver, and at the urging of host Michael Campbell, Schachter polled the audience of 1,300 to see how many people would become subscribers if he should start a newsletter for individual investors and was overwhelmed by the response. “It was clear that these investors were hungry for independent information and since real Energy Bull Markets are so rare,” he said, ‘I wanted these investors to be prepared in time for the next one.” So, he left his fifteen-year position as an Independent Oil & Gas Analyst for Toronto brokerage firm, Maison Placements, where he provided detailed analysis for their Institutional Clients, to start the newsletter.

“Active individual investors have no where else to go to hear the kind of information we are able to put together,” he said, “so we launched the Schachter Energy Report in April of 2017.” Schachter is in regular contact with executives of all the companies he covers and others who are on his ‘Watch List.’

While he acknowledges some of the larger, more well-known companies like Suncor and CNQ are doing very well, he is focussed on companies where the 3-5 year returns would be dramatically higher. “While I believe that Suncor and CNQ will go up in the next cycle, they are not going to be worth five or ten times what they are today,” Schachter predicts. “Some of the companies we cover easily fit that description.”

He believes strongly that one more drop in the price of crude oil this fall will signal the final bottom by breaching the US$60/b level. “We have an amazing opportunity coming and my goal is to inform our subscribers about those companies I believe have made the hard decisions during the past difficult years, positioning themselves for significant upside when the new Energy Bull Market starts.”

That’s why Schachter is bringing together 23 CEOs of energy and energy service companies to the “Catch the Energy” conference September 29th in Calgary. “Outside of attending 23 Annual General Meetings, this is a unique opportunity for individual investors to have access to so many companies and hear their compelling stories,” he explained. “Attendees can interact directly with company executives and determine for themselves which investment ideas best fit their needs.”

Schachter researches, analyses and carefully selects which companies to cover, specifically looking for those with three main components:

  • PEOPLE: the right people are involved and invested, and they have the technical expertise and experience to exploit their opportunities
  • PROJECTS: the right projects in the right places with the right partners and with significant upside potential
  • FINANCIAL CAPACITY: a strong balance sheet with growth potential and supportive shareholders

He is a long term, value-based investor looking for significant returns over time, using various analytical methods to determine when stocks are ‘cheap’ or when they are ‘dear.’

He suggests that investors who are already invested in Oil and Gas stocks, remain patient and hold some cash to buy at even cheaper levels. For those not yet invested, he says stay in cash, investigate the companies you are the most interested in and wait.

“I am an investor,” he quipped, “not a trader and I like sleeping nights!” He says this market, being speculator-driven, is bound to have some wild spikes and drops. His personal style is to find the solid, value-based companies and stick with them. “It is impossible to pick the absolute low or the absolute top of any cycle, but if you can buy close to the bottom, even if you buy early and stay with it through the backing and filling, the upside rewards will be yours.”

Josef Schachter, CFA, is the author of the newsletter “Schachter Energy Report” and is a frequent/regular guest on BNN Bloomberg, Michael Campbell’s ‘Money Talks’ radio show, and the World Outlook Financial Conference. For more information about the conference, please see https://www.schachterenergyreport.ca/conference-2018.