[ad_1]
(Bloomberg) — OnyxPoint Global Management LP’s tactical opportunities fund posted a net return of 28% last year as bets on oil and gas companies paid off amid soaring demand for commodities and a volatile macroeconomic environment.
About 68% of the fund’s assets were in upstream companies, 18% in midstream and the balance across oilfield manufacturing and other commodity-related sectors, according to an investor letter seen by Bloomberg.
Positions in Occidental Petroleum Corp. bonds and Chesapeake Energy Corp. derivative bankruptcy claims drove fund performance, along with investments in Centennial Resource Production, Moss Creek Resources and Laredo Petroleum, according to the letter. OnyxPoint started to exit its bond position in Occidental in the fourth quarter, generating a gross internal rate of return of 43%, and purchased a derivative position in the stock.
Prices for everything from crude oil to wheat soared in 2021 as the global economy recovered from the worst days of the Covid-19 pandemic. An ongoing lack of investment in the energy sector due to both environmental concerns and investor caution after years of losses is creating opportunities, OnyxPoint said. The pandemic spurred a wave of consolidation, while capital spending remains well below its peak, it noted.
“Despite the unprecedented wave of liquidity and cheap capital, finding cash to drill for oil, build a mine, or construct a steel mill has rarely been more challenged,” according to the letter. “This has created a synchronous global commodities shortage and intractable inflationary pressures.”
A representative for OnyxPoint declined to comment.
The Russia-Ukraine conflict could change commodity-market dynamics for years to come amid a growing emphasis on energy security in the U.S. and Europe, OnyxPoint said. Despite investor enthusiasm for renewables, so-called “old energy” is an attractive proposition given its strong cash flows and depressed valuations.
OnyxPoint was founded in 2017 by Shaia Hosseinzadeh. The tactical opportunities fund invests in performing credit, high yield, bankrupt and post-bankruptcy companies.
Distressed debt funds on average gained 15.6% last year, according to Hedge Fund Research Inc., while the Bloomberg Barclays High Yield Energy Index advanced 13.5%.
©2022 Bloomberg L.P.
[ad_2]
Source link
