The investors who backed the fossil fuel producers that dominated returns last year say the structural case for owning commodities is just as compelling now because the market is simply too conservative in estimating future demand for oil and coal.
“I think mining investors will see years of strong returns as the next resources supercycle really gets under way,” said Regal’s head of resources,“There’s an array of special interest groups opposing new mines but no voice championing the benefits of new mines for consumers and living standards,One of the Regal manager’s best ideas was buying Champion Iron below $5 – “the ASX’s most under-appreciated” decarbonisation play. The Canadian dual-listed producer, which last traded at $7.
He remembers saying in 2020: “if you’re not overweight energy now, you never will be”. “It was absolutely against the consensus of the time,” he recalls. Lazard favoured Woodside for its then-modest valuation, growth optionality and pristine balance sheet.This year, he’s particularly favourable to gas producers, with a view to their superior cashflow generation. And, he adds, some bold forecasters are assuming a higher Asian LNG price – exceeding $US10 – out to 2030.
, then homegrown infrastructure manager 4D showed how the right assets can be the antidote to inflation’s corrosive forces.
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