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Simon Lack, Portfolio Manager

220 posts

Simon Lack is Founder and Managing Partner of SL Advisors, LLC. Mr. Lack is Portfolio Manager of an energy and infrastructure fund at Catalyst Capital Advisors LLC. Mr. Lack’s experience includes: Managing Director, JPMorgan Global Trading Division and CEO, JPMorgan Incubator Funds. Mr. Lack has authored The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True (January 2012) and Bonds Are Not Forever: The Crisis Facing Fixed Income Investors (September 2013).

4 min

The Fed Is Misreading Housing Inflation

The August CPI report that came out last Tuesday was the catalyst for a sharp market reversal. The headline number was a benign 0.1%, helped by falling gasoline prices. But the “core” number (ex food and energy) came in at 0.6%.

4 min

The Strong Fundamentals Underpinning Pipelines

Since 2016 the payout on the MLP-dedicated Alerian MLP ETF (AMLP) is down by half. Corporations have done better because they generally have higher coverage. Today’s pipeline CFO is building in plenty of cushion to protect payouts even in a steep downturn, which is why dividend hikes and buybacks are becoming more common.

4 min

Commodity & Infrastructure Insights

How Occidental Invests In Lower Taxes

Occidental Petroleum (OXY) has a checkered history. In 2019 CEO Vicki Hollub snatched Anadarko away from Chevron (CVX), who already had a signed deal in place. CVX CEO Mike Wirth showed financial discipline that’s rare in such cases and declined to get into a bidding war. Instead, they walked away with a $1BN break-up fee.

3 min

The High-Priced Energy Transition

“Thankfully, energy has been the bright spot in our client portfolios,” said investor Emily Jaffe. We had just sat down to enjoy a most convivial lunch with Emily and her business partner Jeff Waters of OFC Wealth Management. In the photo below we are toasting the performance of the pipeline sector this year.

4 min

Commodity & Infrastructure Insights

America Dodges The Energy Crisis

US households are learning to cope with inflation in basic necessities, such a food and energy. Even though the recent CPI report was encouraging, the rising cost of living is a political issue. Fawlty Towers, the brilliant twelve episode British comedy series with John Cleese as the eponymous hotel owner Basil Fawlty, has a scene where a contractor who has mistakenly walled off the entrance to the dining room tries to console his irate customer by saying, “Mr. Fawlty, there’s always someone worse off than yourself.” To which Basil shoots back “Well I’d like to meet him…I could use a laugh.”

4 min

Commodity & Infrastructure Insights

Earnings and Pending Legislation Good For Pipelines

The theme to pipeline earnings for 2Q22 is one of positive surprises. It reminds me of Don Layton, former vice chair at JPMorgan and more recently CEO of Freddie Mac, when I told him I’d hired a new derivatives trader with a perfect Math SAT. Don, not easily impressed, responded by recounting a class he attended at MIT where the professor asked anyone who had not achieved an 800 Math SAT to stand up. Only a handful did.

4 min

Life Gets Complicated For The Fed

Making eurodollar futures interesting is not among Fed chair Jay Powell’s goals, but he’s achieved it nonetheless. From just after their June FOMC meeting through Thursday, the market has lopped over 0.50% off the projected rate cycle. The cycle peak has even been brought forward, from March 2023 to this coming December. The FOMC’s Statement of Economic Projections (SEP) has rates peaking at the end of next year, a forecast Powell described as “probably the best estimate of where the Committee’s thinking is still.”

4 min

Commodity & Infrastructure Insights

Why Natural Gas Affects Prices At The Pump

The other day a White House spokesman offered familiar criticism of oil companies for not reducing gasoline prices to match the recent drop in crude. It’s easy to manipulate charts…

3 min

Commodity & Infrastructure Insights

Pipeline Earnings Should Be Good

Earnings season for the pipeline sector kicks off Wednesday 20th with Kinder Morgan. Crude oil prices have slid over the past several weeks, reflecting increased fears of recession and China’s ongoing efforts to eliminate Covid through regional lockdowns. Sharp moves in oil affect energy sentiment and the consequent drop in midstream energy infrastructure reflects these global macro concerns. Fundamentals continue to look very good to us.

3 min

Commodity & Infrastructure Insights

These Are The Good Old Days

It’s an odd recession when the economy adds 372K jobs and the unemployment rate stays at 3.6%. We seem to be talking ourselves into one. Consumer expectations are the lowest in almost a decade. High prices for energy and food are the culprit. Few are seeing their incomes keep pace with 8% inflation, so real incomes have taken a significant hit this year.

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