with Jim Brilliant, CFA and Scott Van Den Berg, CFP®

 

Disclosure

Century Management reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. The information provided in this client update should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the security transactions, holdings or sectors discussed were or will prove to be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein. Past performance of markets, composites, or any individual securities is no guarantee of future results. The performance of accounts in any Century Management strategy may be materially different at any given time. Differences that may affect investment performance include strategy type, cash flows, inception dates, historical prices, and fees. Positions held within each individual account may not be the same from one account to the next. Individual securities may be traded at different times as well as receive different execution prices. In addition, individual accounts may be pursuing similar objectives, but may have different investment restrictions. Certain statements included herein contain forward-looking statements, comments, beliefs, assumptions, targets and opinions that are based on Century Management’s current expectations, estimates, projections, assumptions, targets and beliefs. Words such as expects, anticipates, believes, estimates, projects, targets and any variations of such words or other similar expressions are intended to identify such forward-looking statements. These statements, beliefs, projections, comments, opinions, assumptions, and targets are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which reflect Century Management’s judgment only as of the date hereof. Century Management disclaims any responsibility to update its views, as well as any of these forward-looking statements to reflect new information, future events or otherwise. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind, including, without limitation, no warranties regarding the accuracy or completeness of the material. Century Management is an independent registered investment adviser. A full description of Century Management’s investment strategies and risks are supplied in our Form ADV Part 2. To receive Form ADV Part 2 or if you have any questions about this report, please contact your client service representative at 1-800-664-4888, write to us at 805 Las Cimas Parkway, Suite 430, Austin, Texas 78746, or email us via our website at www.centman.com. You may find ADV Part 2 at www.centman.com.


Jim Brilliant, CFA and Scott Van Den Berg, CFP® provide an update to Century Management's thoughts on the energy markets.

 

 

Disclosure

Century Management reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. The information provided in this client update should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the security transactions, holdings or sectors discussed were or will prove to be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein. Past performance of markets, composites, or any individual securities is no guarantee of future results. The performance of accounts in any Century Management strategy may be materially different at any given time. Differences that may affect investment performance include strategy type, cash flows, inception dates, historical prices, and fees. Positions held within each individual account may not be the same from one account to the next. Individual securities may be traded at different times as well as receive different execution prices. In addition, individual accounts may be pursuing similar objectives, but may have different investment restrictions. Certain statements included herein contain forward-looking statements, comments, beliefs, assumptions, targets and opinions that are based on Century Management’s current expectations, estimates, projections, assumptions, targets and beliefs. Words such as expects, anticipates, believes, estimates, projects, targets and any variations of such words or other similar expressions are intended to identify such forward-looking statements. These statements, beliefs, projections, comments, opinions, assumptions, and targets are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which reflect Century Management’s judgment only as of the date hereof. Century Management disclaims any responsibility to update its views, as well as any of these forward-looking statements to reflect new information, future events or otherwise. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind, including, without limitation, no warranties regarding the accuracy or completeness of the material. Century Management is an independent registered investment adviser. A full description of Century Management’s investment strategies and risks are supplied in our Form ADV Part 2. To receive Form ADV Part 2 or if you have any questions about this report, please contact your client service representative at 1-800-664-4888, write to us at 805 Las Cimas Parkway, Suite 430, Austin, Texas 78746, or email us via our website at www.centman.com. You may find ADV Part 2 at www.centman.com.


Federal Reserve Chair Janet Yellen's most recent statements suggest that the federal funds rate could increase this year. Should this occur, we believe it will be modest and have little impact on the long-term values of our various portfolios. 

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Arnold Van Den Berg: Experiential Wisdom on Value Investing


For the U.S. economy, we believe the largest impact of the UK leaving the EU, at least in the short run, is the strengthening of the U.S. dollar. An increase in the value of the U.S. dollar could lead to tighter financial conditions, though we don’t believe this will be enough to push the U.S. into a recession. Along with other mixed U.S. economic data points, the Brexit vote will likely force the Fed to continue its easy monetary policy. We see this as bullish for commodities such as gold, oil and other hard assets over the long run.

 

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By year’s end and into 2017, we expect the world will face an undersupply of oil and tighter inventory with little to no spare capacity. This in turn should drive oil prices higher.  Our best estimate is that the price of oil ends the year close to $70. With a 90% correlation between the oil service index and the price of oil, we believe, under this scenario, energy stocks will outperform many sectors of the market in 2016 and even more so in 2017.

 

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Over the past nine months, the decline in the price of oil, as well as the decline in the stock prices of many energy and energy-related service companies, has caused a great deal of uncertainty for investors. The big fear among many investors today is that the U.S. energy industry will experience a repeat of the 1986 oil crash, which lasted a decade in North America. We believe it is the fear of this “repeat” that has brought many energy company valuations down to levels we have not seen since that time.

Our research and analysis will show:

• Spare capacity throughout today’s energy markets is significantly different than in past cycles.

• If you look out over the next few years, the energy market appears to be much tighter than the general investing public believes.

• In our opinion, the fear of a prolonged disaster scenario for the energy sector is overblown and largely discounted in current stock prices, presenting an opportunity for very attractive returns in many energy-related companies.

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Arnold Van Den Berg, Chief Executive Officer and Co-Chief Investment Officer, spoke during Century Management's 2014 Client Review. The review was held on October 25, 2014, at the Four Seasons Hotel, in Austin, Texas.

Jim Brilliant, Co-Chief Investment Officer and Portfolio Manager, spoke during Century Management's 2014 Client Review. The review was held on October 25, 2014, at the Four Seasons Hotel, in Austin, Texas.

Stephen W. Shipman, CFA, Senior Portfolio Manager, presented at Century Management's 2014 Client Review.

The review was held on October 25, 2014, at The Four Seasons Hotel, in Austin, Texas.