Fishing Lodge Indicator 2013

fishing-haul

Almost every year around this time I’m lucky enough to get away for a few days of fishing with my Dad and a few close friends. It’s an amazing time to reconnect with nature, hang out with family and friends, and meet some amazing new people. It’s also a great opportunity to take the pulse of business and the economy. A quick explanation from last years post:

Our group has been going to the same lodge Queen Charlotte Islands for the last couple years – some have been making the trip for the last dozen or so years. Most of the guests at this particular lodge work in the industrial and financial sectors. In addition to fishing, it’s a great place to have informal conversations about business and the economy with people with boots on the ground.

Even better is analyzing the various industry constituents that make up the lodge guests. The lodge is always full of familiar faces because about 60% of the guests are long-term repeat visitors. The other 40% is made up of newcomers. These newcomers are often from an industry that has been particularly hot or up-and-coming in the last year. They’re there because of perks for top sales teams, executives rewarding themselves, or other celebratory achievements. Over the years, we’ve noticed that whatever industry dominates a season is usually worth paying close attention to. The disagreement is whether it is a bullish or bearish sign. Some think that it’s a healthy sign and others see it as an indication that the industry as reached, or is very close to, full valuation.

Last year I highlighted residential home builders. They broke out last summer and went on to an epic run. This year the group which seemed best represented was the fracking community, i.e. North American shale oil exploration and production companies. The fracking industry was represented last year (and noted in the post) but this year it was the dominant industry.

After a quick screen, I found the biggest and healthiest looking names to play: $APA, $PXD, $DVN, $EXC, $EGN, $SM, $CXO, $WLL, $KOG

This is an unofficial and very informal survey — take it with a grain of salt, but make sure you keep the fracking companies on your radar.

 

Read also:  Fishing Lodge Indicator (Dynamic Hedge)


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