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Category: Investment, Natural Gas
Natural Gas: Win the Battle, Lose the War
January 14, 2010
Energy Commentary from Karl Miller - Read Bio and More info
For public interest, senior Energy industry executive Karl W. Miller issued the following statement, through his advisors regarding the raging battle underway between the short sellers and the long term fundamental buyers in the Natural Gas market. This battle is underway in the futures market, the over the counter swaps market, and in natural gas company stocks as we go into what is touted to be a record natural gas draw from "stated" storage.
Mr. Miller would like both sides to take a moment and consider a strategy quote from Sun Tzu, "The general who wins a battle makes many calculations in his temple ere the battle is fought. The general who loses a battle makes but few calculations beforehand. Thus do many calculations lead to victory and few calculations to defeat: how much more no calculation at all! It is by attention to this point that I can foresee who is likely to win or lose".
It is true that to win on the battlefield of investing, one must take risk, and investors win and lose many battles on individual investments over the course of their career or investment horizon, depending on whether they are institutional money managers or individual investors.
One must be very careful however not to focus too much on the small battles or skirmishes and become lost in the mist, but rather focus should be placed upon the greater victory of what we refer to in the investment industry as "total return".
Clearly we have numerous short sellers lost in the mist regarding natural gas industry today. While they focus on the battles of trying to knock down a set price point of a futures contract, swap price or shorting an individual stock, their flank has become massively exposed to the risk of a major loss, some will be catastrophic. There are many examples of casualties, but the most recent that comes to mind is the Hedge fund Amaranth, which focused on winning a battle in natural gas, and lost the war, which cost them dearly, they were liquidated.
Mr. Miller's investment views regarding natural gas are well known to the professional investors, and he has made clear what is to come in the natural gas market over the past year. Mr. Miller has lost investment battles over the course of his energy career, sacrificed assets and investments where necessary, but has never lost a war, where he had control.
To achieve long term "total return" you have to live in the trenches, but not keep put your head in the mud. That being said, Mr. Miller has never hesitated to take out a weak investment and short or sell if required and operates under the mantra that "you show no mercy in business, for none will be shown to you".
As gauntlet has been laid in the natural gas market, and the battle between the short sellers and fundamental buyers rages, Mr. Miller provides these words of wisdom for both sides to consider from his twenty plus years in the financial and energy industry and the trenches, "fear not the messenger, but fear who he represents".
This is what keeps Mr. Miller and other investors like him excited about the energy industry, "it all about the hunt". Just know what you are hunting, who you are hunting against.
Good hunting to all and consider the message delivered for those dedicated energy investors who know Mr. Miller.
Mr. Millers Office
Disclaimer:
This column, Energy Commentary from Karl Miller, is the opinion of Karl Miller.
Content found in the articles is subject to the terms found in the InvestorIdeas.com disclaimer and does not represent a recommendation of investment advice. Investors should seek the advice of a qualified investment professional prior to making any investment decisions.
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