From Fish Oil to Deepwater: Not a Texas Hedge For Higher Rates

I once lost a small fortune betting on a fish oil patent and a federal judge’s opinion. That was Amarin. This is not that.

It was 2020 and I was overexposed, outside my lane, and completely at the mercy of (wait for it) a federal judge’s view on whether or not a fish oil derivative counted as novel intellectual property. How did I get there you may ask? A story for another day, but the moral of that story is outsized positions can cause outsized pain. Even if you think you’ve got it dead to rights.

Today I find myself sharper, tighter, and frankly better as an investor. But lately even I have gotten just a little too heavy on the lower rates, soft landing, risk-on beta trade. Trafficking in Fintechs and banks as I do, I kind of always skew to cyclicality but the more I looked recently, the more I realized: I had almost zero exposure to the flip side of that coin. If somehow, someway oil slipped higher and inflation took off, my book largely would lag.

So, this one today is a quick walk through on an energy stock meant to hedge the other side of my low-rate soft landing beta names. A higher-rates name. One that wins if energy prices rise and that famous dual peak Apollo inflation graph comes true. Texas hedges for those of you unaware are positions that actually double down your risk, so this one is not that, but it’s one that I think has a beautiful profile and a place in my portfolio.

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