Does investing in oil and gas companies still make sense? Money manager Jacinto Hernandez has doubts.
The partner at Capital Group Cos. liquidated $1 billion in oil and gas stocks as Covid-19 spread around the globe in February, according to regulatory filings. Mr. Hernandez said he suspected the expansion of the new coronavirus in Italy was about to crush global demand for gasoline, diesel and jet fuel and with it, any near-term thesis for investing in oil companies. For Mr. Hernandez, the future of fossil-fuel investing depends on the virus and consumer behavior.
Adam Waterous, a Canadian private-equity investor, looked at the same circumstances and came to the opposite conclusion: This was the time to buy. Demand will eventually bounce back, he said, and when it does, prices will spike sometime later this decade. He backed up that conviction in July when his Waterous Energy Fund purchased a big stake in an oil sands company.