Are there any stocks out there that mimic Natural Gas... with contango and backwardation, UNG just isn't good enough.
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What mimics Nat Gas?
- Thread starter drukes1234
- Start date
You mean what mimics the future on nat gas or the spot nat gas?
MilkDrink,
Contango
Contango
Quote from drukes1234:
MilkDrink,
Contango
So you are basically saying that you want something that changes value based on the front month quote... So if nat gas is $4.00 now, you want it to be worth $4.00, and if front month is $6.00 when december comes, you want your investment to go to $6.00 ? I don't think what you are asking for exists, since on most occasions, markets are efficient enough to take away such easy profits. (not saying i believe in efficient markets hypothesis ... just saying that there is enough competition in these liquid instruments to take away easy money quickly)
Try one of the royalty trusts. Your cashflows will be directly linked to what they are actually selling the gas for. You'll have to research them, but PGH or HTE is a place to start. You'll get a yield to make it worth holding... Problem with these things is depletion though. I recall many of the canadian royalties were not great at replacing reserves. You have to find one that does sufficient E&P to replace reserves. You want something in between PGH and DVN (SJT?), most likely. I haven't researched the individual names in the past yr or so, so you'll need to do your own final homework.
I agree with everything said in the above post, something that mimics natty exactly does not exist, what I'm looking for would be an instrument that is so closely correlated to the price of nat gas that it is suitable for my bullish stance. Full disclosure I am very long the UNG from around $14 avg cost and so far the correlation has been decent enough.