This column originally appeared on Real Money at 8:14 a.m. EDT Wednesday.
NEW YORK (Real Money) -- Who will be next to levitate? Perhaps the oils? This group's actually done pretty much nothing this year.
You've got high-quality stocks like Schlumberger (SLB) up only 7% and National Oilwell Varco (NOV) down 4.5%. Exxon's (XOM) up only 2% and ConocoPhillips (COP) is up just 4%; BP (BP), even after that great quarter, is up only a similar amount.
And every time the futures are down, people bang the stocks down, even as that's proven to be a sucker's bet. If you look at how the individual stocks are trading, in reality, Brent's still higher than $100 and that's the only benchmark that matters.How long can this underperformance last if the dollar stays weak -- still lots of hedge funds doing that trade -- and natural gas doesn't go back to below $3.50, the level where profits start getting crimped? How long can it last if we keep getting a bounce in oil at the $93 level here and $102 over there, even as today it is a tad weaker, on news that the Saudis are upping their production? The group's more bifurcated than it used to be because of the activism component. For example, I think that Hess (HES) could still be very much in play as it tries to defend itself against Elliott Management in the May 16 board proxy vote. Elliott has truly traced out some of the problems Hess has, and I have to admit I am dumbstruck at how poorly Hess has been run. I think the company's worth a great deal more than it is selling for. It's the same with Occidental (OXY). I know there are those who are circling OXY, but the main thing is that it is ripe for the kinds of split-ups we have seen that sever refining and marketing from production. Plus, it has a fabulous chemical division. Of course, two months ago you couldn't give this one away after the company said that production wasn't coming through, but that's all been forgiven after the last earnings report. I think the break-up could be an event worth holding out for.
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