Originally posted March 10, 2020.
While most investors are retreating, billionaire Sam Zell is buying up the energy sector. Shawn Langlois reports at MarketWatch:
That’s Chicago billionaire Sam Zell talking to CNBC “Squawk Box” on Thursday about how he’s navigating his investments in the coronavirus scare.
The founder of Equity Group Investments said he has added to his ownership stakes in a couple companies, including one in the beaten-down energy sector, which was under heavy selling pressure even before the recent drop in the broader stock market.
The S&P 500 energy sector is the only sector in an outright bear market, according to Dow Jones Market Data. It’s down 33.11% from its recent high as of Tuesday, marking the third worst bear market for the sector. Meanwhile, the Energy Select Sector SPDR Fund XLE, -4.630% , one of the sector’s broadest and best proxies, is down 24% this year. ,
“We think the energy space is really cheap,” Zell said without naming specific companies. “What helps is we were not in the energy space before.”
He told Bloomberg back in November that oil companies are running out of money to drill and have had to raise capital by selling their cash flow. “The amount of capital available in the oil patch is disappearing,” Zell said at the time. “I compared it to the real-estate industry in the early 1990s, where you had empty buildings all over the place, nobody had cash.”
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