Wednesday, August 09, 2006

Notablecalls - Paperstand

The WSJ's "Heard on the Street" column discusses natural gas stocks. Soaring crude prices in recent years have pushed the stocks of energy co's into the stratosphere and into many investors' portfolios. But investors shouldn't overlook natural gas, which also has seen prices climb. Despite recent volatility in natural-gas prices, there is ample reason to believe the stock prices of co's like Anadarko Petroleum (APC), Devon Energy (DVN) and XTO Energy (XTO) that focus on drilling for gas might still have room to grow after trailing oil-co shares since the beginning of the year. Until a couple weeks ago, natural-gas prices had been beaten down by an excess of the cleaner-burning fuel in US storage. But, thanks to spiking demand from over-taxed utilities during the recent heat wave, gas was pulled out of storage in July for the first time ever in summer months. Amid the tumult for natural-gas prices, the case for higher, sustainable natural-gas prices has been getting stronger. That could spell opportunity for some bargain-hunting investors who have the mettle to ride out price shocks and the curiosity to look beyond crude. Even after the run up, "gas looks a bit cheap," says Ron Muhlenkamp, who owns shares of Anadarko, Devon and Houston Exploration in his $3bn Muhlenkamp Fund. "Unless we outlaw winter or heat waves in the summer, demand should continue to be on the high side. I don't think the sustainability of healthy prices is yet reflected in these stocks."

Barron's Online reports that Hess (HES) execs are guzzling profits by selling shares of the integrated-oil co even as oil prices traipse around record highs. Six execs, including Chmn and CEO John B. Hess, sold nearly 225K shares for $11.8m since July 31.

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