Why I’m Betting Everything on the “Old Economy”

Hey r/stocks,

I want to share my current portfolio and the rationale behind a strategy that would likely make most index investors cringe. My portfolio is 100% focused on commodities, energy, and infrastructure. As you can see from the figures below, it’s been a great ride so far, particularly driven by the offshore sector, which has seen significant gains.

Current Portfolio:

VAL – Valaris – Offshore Drilling +118%

NE – Noble Corp – Offshore Drilling +98%

SDRL – Seadrill – Offshore Drilling +98%

CHRD – Chord Energy – US O&G +60%

SM – SM Energy – US O&G +64%

GPRK – GeoPark – South American O&G +57%

CRGY – Crescent Energy – US O&G +53%

KOS – Kosmos Energy – International O&G +45%

MTDR – Matador Resources – US O&G +38%

MUR – Murphy Oil – International O&G +21%

FIP – FTAI Infra – Infrastructure +15%

SXC – SunCoke Energy – Coking Coal +13%

BTU – Peabody Energy – Coal -1%

MOS – Mosaic – Fertilizer -2%

CRK – Comstock Resources – Natural Gas -22

Why this extremely focused approach?

The rationale behind my portfolio rests on three main pillars: Underinvestment, Free Cash Flow (FCF), and M&A potential.

The Offshore Cycle (VAL, NE, SDRL)

This is where the big gains have been made. After nearly a decade of extreme underinvestment in offshore drilling, the market for advanced "drillships" and "jackups" has become extremely tight.

Companies like Valaris and Noble have cleaned up their balance sheets (often through restructuring after 2020) and now own the most modern fleets. Day rates are rising because virtually no new vessels are being built. This is a supply story more than a demand story.

US O&G (CHRD, SM, CRGY, MTDR, CRK)

In the US, we are seeing a massive wave of consolidation. Chord and Matador are examples of "best-in-class" operators acquiring smaller players to achieve economies of scale and longer "inventory" (locations to drill). These companies have very high FCF margins at an oil price of $80. Instead of spending money on aggressive growth, they are now returning the majority to shareholders via dividends and buybacks. They have become "value stocks" rather than "growth stocks."

Non-US O&G (KOS, GPRK, MUR)

To get some diversification within the energy sector, I hold Kosmos (focused on Ghana/Mauritania) and GeoPark (Colombia). Kosmos is exciting due to their LNG projects, which have just commenced operations; this will transform their cash flow profile.

The Smaller Positions (MOS, BTU, SXC)

Mosaic (fertilizer) is suffering during cyclical lows, but fundamentally, the world needs food, and the soil needs nutrients, so it’s a matter of patience. Peabody (Metallurgical and Thermal coal) faced headwinds during the startup phase of their new coal mine, but most of that should be behind them. Metallurgical coal is weaker, but this is offset by strong demand for Thermal coal from Asia due to the Hormuz disruptions. SunCoke (Coking coal) faced headwinds from a contract breach by one of their major customers, but this is balanced by new long-term contracts that ensure stable, high FCF margins supporting the dividend.

Isn’t it risky?

Yes, absolutely. My portfolio has an extremely high correlation with oil prices and global commodity cycles. If we hit a deep global recession, all of this will go down the drain at the same time.

So why do I do it?

I prefer to own the assets the world actually uses today, rather than paying sky-high multiples for companies that *might* make money in 2035.