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A Trio of Energy Trades

We are adding to our positions in SandRidge Energy, Kodiak Oil & Gas and Vantage Drilling.
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Despite the rebound in the underlying price of crude oil this morning, a lot of energy stocks are trading lower today. After you receive this Alert, we will put some more cash to work in the model portfolio.

First, we will buy 200 shares of SandRidge Energy (SD) , which is currently changing hands around $2.39. This purchase gives us a total of 2,275 shares of the company, which account for 3.41% of the overall portfolio.

We believe the stock is oversold at current levels, because SandRidge has hedged 75% of its oil production for 2015 and has relatively less debt than its small- and mid-cap exploration-and-production (E&P) peers.

Second, we will buy 100 shares of Kodiak Oil & Gas (KOG) , which is currently trading around $6.76. This trade gives us a total of 700 shares of the company, which account for 2.99% of the model portfolio.

Despite the continued decline in the stock, we maintain the proposed deal with Whiting Petroleum (WLL) will materially improve the company’s operating finances going forward.

Third, we will purchase 600 shares of Vantage Drilling (VTG) , which is currently trading around $0.73. This purchase gives us a total of 8,000 shares of the company, which account for 3.67% of the overall portfolio.

The stock has now been cut in half over the past 10 weeks. That said, Vantage’s fleet is contracted out through 2015 and management has been steadily paying down debt.

These three companies have varying leverage to the recent decline in oil prices, but we believe that each has the ability to navigate through this difficult period.

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