Investopedia Highlights a "Bakken" Levered Fund -- for Investors Only

Investopedia's Eric Fox highlights an open-end fund that he says is "levered to the Bakken."  My first look at the fund made me dubious, but closer analysis suggests a very interesting fund for those interested in the Bakken and energy in general. Shortly after posting the note below (literally within minutes), I was sent a link with more information regarding the fund's holdings.

The original post remains, but you may want to cut to the chase and just look at the fund's top 25 holdings which represent 65% of the fund's total assets. Very, very interesting.

One of the nice things about this fund is the fact that the more speculative plays are offset by some very, very good big cap companies.

I am not making any investment advice, but over coffee, I would certainly mention to my friends to take a look at the fund. Here's the link: http://www.integrityvikingfunds.com/PortalIntegrityFunds/DesktopModules/ViewDocument.aspx?DocumentID=59 or click here.

The Original Blog

This is more for newbies than for seasoned investors. Do not take this as investment advice. I was just curious if I could find out more about a fund that was highlighted in Investopedia today.

Investopedia's Eric Fox highlights an open-end fund that he says is "levered to the Bakken."

The fund is the Integrity Williston Basin Mid-North America Stock Fund (ICPAX).

If you look at the Yahoo!Finance, you will see strange names associated with a fund that bills itself as a "Bakken fund." However, Yahoo!Finance has outdated information.

The following is outdated: According to Yahoo!Finance, the top ten (10) holdings which account for 47% of all assets (each of these are 4 - 6% of the total portfolio, each about 5% for round numbers) (this is outdated; these are no longer the top ten holdings of ICPAX, although still listed as such at Yahoo!Financial):

• Shaw Communications (SJR): cable and digital communications; based in Calgary, Canada.
• Ormat Technologies (ORA): geothermal energy; based in Reno, Nevada.
• Teleflex Incorporated (TFX): medical devices; based in Limerick, Pennsylvania.
• ESCO Technologies (ESE): metering for utilities; based in St Louis, Missouri.
• Hess
• Sigma-Adrich Corporation (SIAL): medical chemicals; based in St Louis, Missouri.
• Agrium Incorporated (AGU): agricultural products; based in Calgary, Canada.
• Techne Corporation (TECH): biotechnology; based in Minneapolis, Minnesota.
• Thermo Fisher Scientific Incorporated (TMO): biomedical equipment; based in Waltham, Massachusetts.
• Stillwater Mining Company (SWC): palladium, platinum mining; based in Columbus, Montana.

Without a prospectus, I can't see what companies made up the other 50% of the portfolio at the time Yahoo!Finance published this information, but what struck me was the fact that there was only one "real" Bakken play in this list of ten in a portfolio supposedly levered to the Bakken (again, this was outdated information but this is what made the Eric Fox article interesting).

However, updated information shows something completely different: According to an on-line brokerage report, these are now ICPAX's top ten holdings (they account for 28% of ICPAX holdings). Each of these holdings represent about 2.75 to 3% of its total holdings (about 2.75% rounding off):

• EOG (3.04%)
• CLR( 2.90%)
• BHI: an oil-service company that operates worldwide (2.84%)
• CRR (Carbo Ceramics, Inc): operates worldwide (2.81%)
• AEZ (2.80%)
• BEXP (2.80%)
• WLL (2.80%)
• ENB (2.73%)
• OAS (2.73%)
• LUFK: an oil-service company that operates worldwide (2.66%)

These ten holdings represent less than 30% of the fund's holdings. (I think only six of them -- EOG, CLR, BEXP, WLL, OAS, and AEZ -- as having huge Bakken exposure). Each of these represents less than 3% of total portfolio holdings (except EOG at 3.04%). Interestingly enough HESS is no longer on the list (what's that all about?). But these "Bakken stocks" each only represent 2.75% and they are among the top ten holdings. That means the rest of the holdings are each less than 2.66%, which means there have to be a lot of "small" holdings in this fund.

Hess, by the way, has bought AEZ. 

According to the report, 27% of the portfolio is large cap (I can't think of many large cap stocks with significant exposure to the Bakken) and 7% with giant cap (possibly SLB, XOM, HAL, COP with exposure in the Bakken). Small cap and micro cap make up 38% of the portfolio and that's where the bulk of Bakken companies are, I suppose, with some mid-cap companies. 

It will be interesting to see the prospectus to see what makes up the rest of the portfolio (70% of the portfolio). Since some of the best "Bakken" companies are already listed, I have trouble thinking of thirty to fifty other companies that would be "Bakken." But I may be wrong. I will be watching for the new prospectus.

Other information: 

According to Yahoo!Finance this fund has an expense ratio of 1.5% (category average: 1.47%) which includes a maximum front end sales load of 5.00% I assume the maximum would be incurred for smaller investments, which means one's investment is automatically reduced by 5% on the day the investment is made. It appears there is no "deferred sales load."