This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Small-Cap Energy ETFs Vie for Volatility

NEW YORK ( TheStreet) -- The Oklahoma Exchange Traded Fund (OOK) is a way to access domestic, small-cap energy stocks. A couple months later, Jefferies came out with the Jefferies TR/J CRB Wildcatters Exploration & Production Equity ETF (WCAT).

The big story with the Oklahoma Exchange Traded Fund -- in addition to the smaller exposure that an investor can get through the Energy Select Sector SPDR (XLE) -- is that it provides more volatility, which, at times, is a good thing. While the Oklahoma fund has been a little more volatile and outperformed the Energy Select Sector SPDR, the Wildcatters fund has been even more volatile and a better performer.

Since the Wildcatters fund debuted in January, it's up 1.1% versus a decline of 0.4% for the Oklahoma fund and a drop of 8.8% for the Energy Select Sector SPDR. There are two reasons for the outperformance of the smaller-cap energy ETFs. From the top down, small-cap stocks have done better coming out of the massive stock-market decline.

The other reason comes from the bottom up, and the Energy Select Sector SPDR's huge exposure to Exxon Mobil (XOM - Get Report), which is currently 18%. Exxon is down 9.6% in the period cited above. It also has lagged behind the broader market.

The Oklahoma fund has a couple recognizable companies, such as Devon Energy (DVN) and Williams Cos. (WMB).

The Wildcatters fund has even fewer familiar names. The largest holding is SM Energy (SM - Get Report), at 6.8% of the ETF, followed by Mariner Energy (ME), 5.16%, and Progress Energy Resources (PRQ), 4.5%. The ETF has 59 holdings.

Looking a little closer, the Wildcatters ETF is 67% invested in U.S. companies and 33% in Canadian. At the industry level, 64% is in natural gas and 32% in oil.

The Gulf spill is the biggest story in the world now, yet we don't know the consequences -- environmentally or fundamentally -- for the industry.

This uncertainty could turn out to be a big catalyst for the Wildcatters fund. One plausible result is that BP (BP - Get Report) will no longer be able to do business in the U.S. In addition, the political fallout has called into question the viability of deepwater drilling. For sure, there will be more regulations and steeper drilling costs.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
OOK $0.00 0.00%
BP $39.61 0.00%
SM $51.23 0.00%
XOM $83.58 0.00%
AAPL $123.25 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs