Energy continues to be the theme for Jerry Jordan, manager of the $110 million Jordan Opportunity Fund (JORDX).
The top-down strategy, which has been playing the energy sector to varying degrees for most of the past decade, is currently focused on select oil services stocks.
“It comes down to a lack of supply and growing demand, and we also think most of the people controlling lots of oil are lying about how much they really have," said Mr. Jordan, who manages the fund at Hellman Jordan Management Co. Inc.
He makes his case by citing oil production out of Saudi Arabia during the past few years.
In 2006, when oil was trading at about $60 a barrel, Saudi Arabia was producing 9.5 million barrels a day.
But last year, when oil hit a record $120 a barrel, Saudi Arabia didn't increase its production, even though it claimed it is capable of producing up to 12 million barrels a day.
“Oil producers will do whatever they can to prevent higher prices because they know at certain levels, the price of oil will stimulate the development and use of alternative energies,” Mr. Jordan said.
Some of his favorite positions in the macro theme of a shrinking oil supply include Halliburton Co. (HAL) and Transocean Ltd. (RIG)
Halliburton's stock closed Friday at $26.74, up 47% from the start of the year.
Shares of Transocean, which closed Friday at $83.19, were up 76% from the start of the year.
Meanwhile, the S&P 500 rose 15.6% during the same period.
The Jordan Opportunity Fund gained 40.9% this year through Friday, which compares with a 25.1% average return for the large-cap-growth category, as tracked by Morningstar Inc.
The fund, which was created in the early 1990s as a separately managed account, was registered as a mutual fund in 2005.
The portfolio historically carries between 25 and 40 positions, but currently includes 45 stocks, which suggests that Mr. Jordan sees lots of opportunities in the market right now.
One theme that can be applied to the entire economy, he said, is a lack of pricing power.
“Right now there is too much overcapacity in everything,” Mr. Jordan said. “I'm looking for areas where there's not overcapacity or where a company has a competitive advantage.”
An example is the health care sector, where the right product or the protection of a patent can give a company an edge.
In this sector, Mr. Jordan likes Myriad Genetics Inc. (MYGN) for its unique advantage in the area of certain diagnostic kits.
The stock closed Friday at $26.64, down 19% from the start of the year.