VanEck CEO Jan van Eck suggests that investors should contemplate allocating funds to an underperforming segment of the market. Van Eck emphasizes that oil stocks are being undervalued, and receiving unfair treatment in the current market landscape.
This week he said, “The [oil] supply is there. The companies are arguably the next best cash flowing companies [compared to] the semiconductors,” and that “They’re trading at double-digit cash flow yields for E&Ps [exploration and production] and sectors in the oil market. No one cares. No one cares.” to CNBC’s “ETF Edge” this week.
VanEck Oil Services ETF, managed by his company, currently oversees a portfolio with prominent holdings such as Schlumberger, Halliburton, and Baker Hughes, as indicated by FactSet data as of January 31.
In terms of performance, the ETF has experienced a downturn of nearly 7% since the beginning of this year, and it has depreciated by over 9% over the past 52 weeks. In contrast, during the same period, the S&P 500 has seen an increase of more than 5% in value.
Van Eck said, “It’s [energy] underperforming a lot of other things, but not really badly considering the driver for global growth is really on its back right now and could be for a couple of years.”
Todd Sohn of Strategas identifies oil stocks as currently unpopular and anticipates the possibility of a reversal in sentiment.
It has been said by the firm’s ETF and technical strategist that “They had pretty large outflows last year. And, if tech were to take a hit at some point in this quarter, I would guess the more tactical folks rotate into stuff like energy or even health care”