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Adam Johnson anchored several business programs at Bloomberg Television over five years, interviewing CEOs, heads of state, and Nobel laureates. His daily video investment blog, Insight and Action was sponsored by a major U.S. lender. Previously he managed global risk assets for ING Furman Selz and Louis Dreyfus, trading oil futures, listed equities and equity options. Adam began his career at Merrill Lynch with a degree in economics at Princeton.
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Hard Assets, Real Money
Capitalizing on Cheap Oil
- Nation’s largest pipeline system spans 90k miles across 38 states and accounts for 30% of US capacity
- Current pricing dislocations enable physical operators to buy/store/hedge product at significant profit
- Multiples on energy companies reflect extreme pessimism and create compelling entry points
Opportunistic Buyer – I was twenty-five and working at Europe’s oldest commodity firm when I made the trade of my life. We had stockpiled several million barrels of heating oil in anticipation of a cold winter, but as I watched the spread between jet fuel and heating oil collapse to zero… since all the storage tanks were full… I convinced my boss to deliver our entire heating oil position into the NY Mercantile Exchange and replace it with jet fuel. I reasoned that this was like buying steak for the price of hamburger, and when when markets normalized, we’d be richly rewarded. Winter eventually arrived, and since jet fuel has a lower freeze point than heating oil, the nation’s truckers once again started adding jet to their diesel. Prices re-inflated and we booked inordinate gains. I see a similar trade taking shape today, and I’m not alone. When oil futures fell to an unthinkable negative $35 last month because storage had been filled to capacity, the nation’s largest pipeline operator started buying. Like me a few years ago, the company got creative and found extra places to stash stranded barrels, especially in out-of-the-way locations. I sense profit on the horizon, and since this company’s stock trades at just six times earnings, I too am buying.
May 22, 2020Read More
Plugging Back In
5G Leader Returns
- 5G rollout presses forward in China, S. Korea and the US despite timing setbacks from quarantine
- Demand for data is forecast to increase fivefold by 2025 according to Boston Consulting Group
- The global leader in 5G patents trades near the lower end of historic valuation creating compelling value
Hello Again – Discipline and flexibility are not two words I would typically associate with one another, and yet that’s exactly what I’m doing with this new/old pick. Early in 2018 I bought the world’s leading 5G patent holder as a promising growth story, then sold when its stock surprisingly accelerated to my target just months later. I returned for a second time after the “December to Remember Selloff” knocked shares back into the buy zone, and once again booked profits after a move to the target. Now I’m returning for a third time. What I’ve learned in this process is that discipline involves setting a target in advance… and selling when it is reached… while flexibility means being able to toggle back and forth between buyer and seller. Again, two concepts which I wouldn’t have linked together automatically, and yet they complement one another quite logically. So, with the world’s 5G pioneer once again in range, I return as a buyer.
May 22, 2020Read More
- Thank you for your trust as we navigate the evolving landscape and plot our pathway to recovery
- Your many emailed notes and thoughtful questions demonstrate our collective resilience and resolve
- Posing questions and collaborating on solutions offers a vital and proactive way to strengthen our process
One Plus One Equals Three – I am a firm believer that two smart people working together often reach a better, faster decision than if each had been working alone. Partners help us see things we might not have seen on our own, and ultimately the sum of the parts is greater than the whole. With this in mind, I am digging into the many questions and comments I’ve received during the market’s stunning reversal from March lows, responding in public so we can all benefit. Your questions invariably make me sharper, primarily because they force me to re-examine my assumptions and crystalize a viewpoint. For this I am extremely grateful. I also realize that many of the inquiries I receive are relevant to other readers as well. If one person has asked a question, chances are others have been wondering the same thing too. So, thank you and please keep them coming.
May 22, 2020Read More
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