So What do We Like in Energy?

We like Tenaris SA (TS). It is the Luxembourg based maker of steel tubes and pipes for the oil and natural gas industry. One of the world's largest. It has been sold of on falling stocks, falling commodity prices, and falling Argentine stocks. Yes, Tenaris is listed in the MSCI Argentina index (part of the MSCI Latin America index for those that care about indexes and such nonsense). Soon it will be moved to the MSCI Italy index, relegating Argentina to index obscurity.

Forced selling of emerging market funds have seen massive redemptions has hurt the stock. As usual the public was very late to the emerging markets game and must now pay the price. Not having bought in 2003-2006, the "crowd" climbed aboard in 2007 and 2008. Why would they buy as prices had gone up 35% a year from 2003 through 2006? Because contrary to the Efficient Market Theory (EMH), man is not rational. He has never been and never will be. He is governed by fear and greed and shall be forever.

We are buyers of Tenaris after forced emerging market and commodity liquidations with the belief that the energy industry will require massive infrastructure in Africa, the Caspian, and Brazil. TS trades at 4x 2009 estimated profits and yields 4.5% as of today. Even if EPS estimates are twice too high we would still be paying single digits P/Es and receiving a handsome dividend yield.

We can't guess what the market will do tomorrow or next year, but we do attempt to highlight special situations and distressed assets that are fundamentally sound for our readers.

http://finance.yahoo.com/q/ae?s=TS

As always we are not making recommendations for anyone, but outlining our personal investment decisions. We are not registered investments advisors and do not give investment advice.