Diamond Hill Capital Management, LLC on Chevron Corporation
Thesis
Diamond Hill bought Chevron to increase exposure to oil prices and stronger refining margins. Renewed Middle East hostilities and persistent refinery tightness have supported the near-term economics of its operations. The manager also sees a growth opportunity in proposed production increases in Venezuela following a U.S. oil agreement. Chevron replaced some natural-gas exposure as the portfolio repositioned within energy.
“its leverage to higher oil prices and refining margins”
Key risks
- Oil prices and refining margins could retreat if geopolitical tensions ease
- Venezuelan production expansion depends on political and execution conditions
- Energy demand and commodity prices remain cyclical