Old West Investment Management has delivered a 31% gain for its flagship fund this year, thanks to a strategic increase in energy stock holdings long before recent geopolitical developments drove oil prices higher, according to a report by Bloomberg.
The Los Angeles-based hedge fund began raising its exposure to energy equities when crude oil traded around $60 a barrel, anticipating a rebound after years of underperformance. At the time, Venezuela remained under Nicolás Maduro, and fears of a Middle East conflict were largely hypothetical.
Brian Laks, Old West’s Chief Investment Officer, acknowledged the element of luck in the timing but emphasised the firm’s long-term view of energy as a scarce and essential resource.
Old West’s shift raised its energy allocation from single-digit levels to over 30% of the portfolio, a move initially seen as contrarian by some in the market. While analysts expected oil to fall due to oversupply and weaker demand, the sector defied predictions, setting the stage for a rally.
The fund’s timing proved prescient: geopolitical tensions, including US-Israel strikes on Iran and sanctions on Russia, pushed oil above $110 a barrel, amplifying gains in companies such as Canadian Natural Resources, Murphy Oil, Suncor Energy, SLB, and PBF Energy.
Old West’s performance has outstripped well-known peers, including Pierre Andurand’s flagship fund, RCMA Capital’s Merchant Commodity Fund, Citadel Wellington, and Balyasny’s Atlas Enhanced fund. Laks said the firm also trimmed positions in sectors that had already performed strongly, such as precious metal miners, while benefiting from previous investments in critical minerals.
Looking ahead, Laks sees further upside potential. He highlighted that energy demand could remain robust, supported by electricity-intensive AI data centres and ongoing infrastructure needs. “Even with this strong run, the long-term outlook for energy remains compelling. We’re not stepping away from oil anytime soon,” he added.
