| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 47.7% | 47.7% |
Open Square Capital returned 47.7% in Q1 2026 versus the S&P 500's -4.3% loss, driven primarily by oil-focused positioning ahead of and during the US-Iran conflict. The manager views the Strait of Hormuz closure as a fundamental reset of global energy markets, creating a supply disruption of 14 million barrels per day that exceeds COVID's demand shock. With an estimated 700-800 million barrels of production lost and structural changes including higher strategic reserves and reduced spare capacity, the manager expects oil prices to settle at $80-90/barrel long-term versus the previous $65 baseline. The portfolio is concentrated in energy names including Occidental Petroleum warrants, which benefit significantly from higher oil prices, and a new position in Valaris to gain exposure to the Transocean merger in offshore drilling. The manager exited Peloton due to economic backdrop concerns and trimmed software positions to focus on energy themes. Despite recent ceasefire negotiations, the manager believes the geopolitical and supply impacts will prove permanent rather than transitory.
The US-Iran conflict and Strait of Hormuz closure represents a fundamental reset of global oil markets, creating a supply shock larger than COVID that will permanently alter energy pricing and security dynamics, benefiting energy companies positioned for higher long-term oil prices.
Manager expects oil prices to remain elevated post-conflict with a new floor significantly higher than the $65/barrel starting point. Views the conflict's impacts as permanent rather than transitory, anticipating structural changes in global energy markets including higher inventory buffers and strategic reserves. Believes energy companies are woefully underpriced relative to expected cash flows at $80/barrel oil.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 15 2026 | 2026 Q1 | INTU, OXY, PTON, RIG, TEAM, VAL | commodities, Conflict, Drilling, energy, geopolitics, Iran, oil |
OXY VAL PTON |
Open Square Capital delivered 47.7% returns in Q1 2026 by positioning for higher oil prices ahead of the US-Iran conflict. The Strait of Hormuz closure created a supply shock exceeding COVID's impact, with 700-800 million barrels lost. Manager expects oil to settle at $80-90/barrel long-term, benefiting concentrated energy holdings including Occidental Petroleum warrants and offshore drilling exposure through Valaris. |
| Jan 26 2026 | 2025 Q4 | OXY, PTON | AI, Bubble, energy, Fitness, Long/Short, oil, valuation | - | Manager runs barbell strategy long unfavored oil and fitness stocks while short AI bubble names trading at 65x revenue. OPEC+ price war creating oil oversupply concerns but builds smaller than expected with shale growth killed. Expects consolidation in energy sector and Peloton's wellness platform transition to drive returns as AI valuations eventually correct. |
| Jul 25 2025 | 2025 Q2 | ATH.TO, CNQ.TO, CVE.TO, CVX, MEG.TO, OXY, SCR.TO, SU.TO, XOM | Carbon Capture, energy, M&A, oil, tariffs, Trade Policy |
MEG CN SCR CN OXY MEG.TO OXY |
Open Square Capital expects hot US economic growth to drive energy demand while oil supply tightens from declining US shale production. The fund awaits a higher premium for MEG Energy's hostile takeover and benefits from enhanced carbon capture tax credits for Occidental Petroleum. Trade war disruptions are viewed as temporary headwinds before growth acceleration. |
| Apr 21 2025 | 2025 Q1 | - | China, energy, inflation, oil, rates, Recession, tariffs, Trade Policy | - | Trump's tariff war triggers economic uncertainty and bond market panic, with oil demand falling 1.1M bpd and recession expectations rising. Manager expects mild recession as global trade reorganizes, maintaining defensive cash position with potential short hedges given administration's incompetent execution and disregard for market consequences. |
| Jan 25 2025 | 2024 Q4 | MEG.TO, MSTR, OXY, PTON, TSLA, XLE, XOP | crypto, energy, fundamentals, oil, Speculation, value |
OXY MEG.TO |
Energy-focused fund suffered in 2024 betting against speculation while oil inventories hit 5-year lows. Manager maintains conviction that fundamentals will reassert over crypto mania and meme investing. Positioned for oil price recovery through Occidental Petroleum and MEG Energy holdings, expecting supply constraints and demand recovery to drive energy outperformance. |
| Oct 22 2024 | 2024 Q3 | - | China, energy, Inventories, oil, Opec, Sentiment, Stimulus | - | Open Square Capital sees extreme opportunity in energy markets where sentiment has reached historic lows despite fundamentally tight inventories and underinvestment. Their thesis centers on global energy supply shortfalls while China's fiscal stimulus should boost demand recovery. They expect physical market fundamentals to overcome algorithmic selling pressure. |
| Jul 15 2024 | 2024 Q2 | - | China, Elections, energy, geopolitics, Macro, oil, Recession | - | Energy markets face headwinds from Chinese weakness and potential US recession, but OPEC+ discipline provides price floor while election-driven SPR releases cap upside. Fed's restrictive policy and consumer credit stress increase recession risk. Manager maintains medium-term energy bullishness despite near-term volatility, making minor portfolio adjustments while watching for major market pivots ahead. |
| Apr 12 2024 | 2024 Q1 | NVDA, SMCI | AI, Bubbles, Canada, energy, geopolitics, oil, Speculation | - | Energy-focused fund positioned for range-bound oil prices with Canadian holdings benefiting from pipeline completion. Manager skeptical of AI infrastructure bubble but recognizes long-term commercialization potential. Portfolio companies generating healthy cash flows for debt paydown and shareholder returns. Carbon capture investment provides free optionality on green energy transition. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
OilManager views oil as experiencing a fundamental reset due to the US-Iran conflict and Strait of Hormuz closure. Expects oil prices to settle at $80-90/barrel long-term due to lost production, reduced inventory buffers, and countries building strategic reserves. Sees this as a structural shift rather than temporary disruption. |
Oil Energy Geopolitics Supply Pricing |
GeopoliticsManager describes the US-Iran conflict as a self-inflicted wound that will permanently alter global energy markets and trade flows. Views this as the end of US role as benevolent hegemon safeguarding international trade, leading to a balkanized world where countries hoard energy for their own benefit. |
Iran Conflict Trade Security Infrastructure | |
Offshore DrillingManager acquired Valaris to gain exposure to Transocean through their merger, viewing the combined entity as better positioned to control pricing and utilization in the consolidated drillship market. Expects offshore capex to grow as producers increase production following the war. |
Drilling Consolidation Utilization Pricing Capex | |
Energy StorageManager expects countries to build higher inventory buffers and strategic petroleum reserves following the conflict, which will increase structural demand for oil. Views this as a permanent shift in how nations approach energy security. |
Inventory Strategic Reserves Security Demand | |
| 2025 Q4 |
AIAI infrastructure plays dominated 2025 returns, with 65% of Russell 2000's return coming from AI infrastructure. The manager views this as a concentrated market levered to a singular theme - essentially a bet on how much CAPEX five companies will spend building data centers. Questions whether the AI trade will persist given its concentration. |
Infrastructure Data Centers CAPEX Concentration |
Small CapsSmall caps continued to underperform large caps in 2025. The Russell 2000's returns were dominated by AI infrastructure plays and speculative unprofitable companies, creating extreme bifurcation between unprofitable stocks and quality stocks. Quality businesses now trade at historically cheap multiples. |
Russell 2000 Quality Valuation Underperformance | |
QualityExtreme bifurcation in performance between unprofitable stocks and quality stocks in 2025. Quality businesses today trade at historically cheap multiples despite the concentrated market conditions. This creates opportunities for active managers focused on quality. |
Valuation Multiples Bifurcation Opportunity | |
| 2025 Q2 |
Trade PolicyThe US is engaged in a trade war with China, implementing tariffs as high as 145% on Chinese goods. The manager believes this decoupling strategy will ultimately fail as the US is already backtracking and softening positions. Trade frameworks lack substance and the market is betting on the TACO trade (Trump Always Chickens Out). |
Tariffs China Decoupling Trade War TACO |
OilOil inventories built by 220M barrels in H1 2025, with the majority in China due to strategic petroleum reserve filling and refinery slowdowns amid trade uncertainty. OECD inventory builds were more muted. The manager expects US shale production to decline as rigs and frac spreads are down over 10% year-over-year. |
Inventories Shale OPEC Production Demand | |
Oil SandsStrathcona Resources launched a hostile takeover for MEG Energy, the fund's largest position, offering a 9.3% premium. The manager believes oil sands historically sell with 20-40% premiums and expects a higher offer. MEG has best-in-class Christina Lake SAGD operations with 50-year reserve life. |
MEG Strathcona Takeover SAGD Premium | |
Carbon CaptureRepublicans preserved and enhanced Section 45Q tax credits for carbon capture, raising them from $130 to $180 per metric ton for direct air capture used in enhanced oil recovery. This benefits Occidental Petroleum's DAC facility Stratos and creates synergistic advantages for carbon management programs. |
45Q DAC EOR Occidental Tax Credits | |
| 2025 Q1 |
Trade PolicyTrump's reciprocal tariffs mark a profound shift from decades of rules-based global free trade, creating uncertainty and forcing countries to choose sides between US and China. The administration aims to cleave willing participants from China and restore US manufacturing through heightened trade barriers. |
Tariffs Protectionism China Manufacturing Trade War |
OilOil demand expected to fall by 1.1M bpd due to economic retrenchment, with prices touching $57/barrel after Liberation Day. US production will decline by 500K bpd by year end at $60/barrel, contrasting with analyst expectations of growth. |
Crude Production Demand OPEC Recession | |
RatesBond market panic emerged as 10-Year Treasury rates jumped 50 basis points in days, reminiscent of UK's Liz Truss crisis. Rising rates threaten to destabilize the US economy as debt servicing costs increase for a debtor nation. |
Treasury Bond Market Interest Rates Debt Crisis | |
InflationTariffs function as consumption taxes that will eventually be passed to consumers, creating regressive burden on the poor. The administration seeks to shift tax base from direct taxes to consumption taxes similar to European VAT systems. |
Consumption Tax VAT Consumer Prices Regressive Tax Burden | |
| 2024 Q4 |
OilManager believes oil prices are skewed to the upside due to inventories at 5-year lows, slowing non-OPEC production growth, and potential demand recovery from China stimulus. OPEC+ gaining leverage as spare capacity resides with them while US shale production has plateaued. |
Oil OPEC Inventories Shale Energy |
CryptoManager expresses skepticism about crypto mania, citing Microstrategy's 0% convertible bond issuance to buy bitcoin and proliferation of meme coins. Views current crypto enthusiasm as part of broader market speculation driven by excess liquidity. |
Crypto Bitcoin Speculation Liquidity | |
Carbon CaptureOccidental's Stratos CCUS facility will begin operating this summer, designed to capture 500,000 tonnes per year initially. Manager believes 45Q tax credits from IRA will remain despite Trump administration, as benefits flow to Republican states. |
Carbon Capture CCUS Climate Technology | |
| 2024 Q3 |
OilThe fund maintains conviction that the world has underinvested in energy, with US shale growth slowing and non-OPEC+ supply disappointing. Oil prices have averaged $82/barrel for nearly 2 years with anemic supply growth, yet sentiment has cratered to historic lows below COVID levels. The disconnect between paper markets trading 30+ barrels per physical barrel and actual fundamentals creates opportunity. |
Energy OPEC Shale Supply Inventories |
ChinaChina faces economic headwinds from real estate implosion affecting nearly a quarter of GDP. The government has announced fiscal stimulus programs including potential RMB1T payments to families and property market support measures. The fund views China as beginning to bottom, with fiscal stimulus having higher multiplier effects that should boost oil demand recovery. |
Stimulus Property Recovery Demand GDP | |
| 2024 Q2 |
OilEnergy markets remain range-bound in 2024 with OPEC+ managing supply while demand faces headwinds from Chinese economic weakness and potential US recession. Floor supported by OPEC+ supply discipline, ceiling capped by potential SPR releases ahead of elections. |
OPEC Inventories Demand Supply Geopolitical |
ChinaChinese economy experiencing two-speed growth with exports supporting GDP while domestic consumption remains weak due to property market decline. Potential Trump tariffs could further impact Chinese exports and oil demand growth. |
Property Exports Tariffs Consumer GDP | |
RatesFed maintaining restrictive policy with only two rate cuts expected in 2024 starting September. Current 5.33% Fed Funds rate well above neutral, creating tight financial conditions that will persist into 2025. |
Fed Cuts Neutral Conditions Inflation | |
Credit StressConsumer credit stress rising with defaults on credit cards and auto loans above pre-pandemic levels. Personal savings rate plummeted to 4% from 9% pre-COVID as excess pandemic savings depleted. |
Defaults Savings Consumer Financing Stress | |
Trade PolicyPotential Trump victory could bring 60% tariffs on Chinese goods, significantly impacting trade flows. Previous 2018-2019 trade war reduced Chinese GDP by 0.5%, with higher tariffs potentially causing 2% GDP decline. |
Tariffs Trump Trade War Protectionism Onshoring | |
| 2024 Q1 |
OilUS production has retreated from previous highs and is hovering ~300K bpd lower than peak. The Permian basin is maturing with development activity shifting to milking reservoirs for cash flows. OPEC+ cuts, particularly Saudi discipline, are solidifying the oil price floor with inventories remaining flat in seasonally weak Q1. |
Permian OPEC Production Inventories Brent |
AIAI represents the evolution of data analytics sped up exponentially. While infrastructure companies like Nvidia are inflecting today, the real winners will be those who commercialize AI applications, similar to how FAANMG emerged from the internet bubble rather than infrastructure providers like Cisco. |
ChatGPT FAANMG Infrastructure Commercialization Data | |
Carbon CaptureOne holding's forays into CCUS via Direct Air Capture represents a free option on green energy as the carbon credits market matures. This is a real-world, physical solution to a global issue with customers already signed to long-term agreements, though Wall Street assigns net zero value to the venture. |
CCUS DAC Carbon Credits Net Zero Green Energy | |
PipelinesThe imminent line fill of the Trans Mountain Express pipeline in Canada is providing a tailwind for Canadian holdings. Once operational, transportation costs for Canadian crude should fall, narrowing the WCS/WTI price differential and allowing Canadian oil companies to capture additional margins. |
TMX WCS Transportation Canadian Energy Takeaway Capacity |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 15, 2026 | Fund Letters | Open Insights Capital | OXY | Occidental Petroleum | Oil & Gas E&P | Oil, Gas & Consumable Fuels | Bull | New York Stock Exchange | capital discipline, debt reduction, dividend, energy infrastructure, Equity, Free Cash Flow, Oil & Gas, Share Buybacks, warrants, WTI | Login |
| Apr 15, 2026 | Fund Letters | Open Insights Capital | VAL | Valaris | Oil & Gas Equipment & Services | Energy Equipment & Services | Bull | New York Stock Exchange | consolidation, Day-rates, Deepwater, Drillships, Energy Services, Equity, Fleet utilization, Jackups, Merger Arbitrage, offshore drilling, warrants | Login |
| Apr 15, 2026 | Fund Letters | Open Insights Capital | PTON | Peloton Interactive | Leisure | Leisure Products | Neutral | NASDAQ | Consumer Discretionary, Economic Sensitivity, Equity, fitness equipment, new management, Position exit, subscription model, turnaround | Login |
| Jul 25, 2025 | Fund Letters | Nelson Wu | MEG CN | MEG Energy Corp. | Energy | Oil & Gas Exploration & Production | Bull | New York Stock Exchange | acquisition, Canada, cash flow, Oil sands, takeover, valuation | Login |
| Jul 25, 2025 | Fund Letters | Nelson Wu | SCR CN | Strathcona Resources Ltd. | Energy | Oil & Gas Exploration & Production | Bull | New York Stock Exchange | acquisition, Bid Strategy, Canada, consolidation, Oil sands, Reserves | Login |
| Jul 25, 2025 | Fund Letters | Nelson Wu | OXY | Occidental Petroleum Corporation | Energy | Integrated Oil & Gas | Bull | New York Stock Exchange | carbon capture, DAC, energy, EOR, Permian, tax credits | Login |
| Jul 25, 2025 | Fund Letters | Open Insights Capital | MEG.TO | MEG Energy Corp | Energy | Oil & Gas Exploration & Production | Bull | Toronto Stock Exchange | Canada, energy, Free Cash Flow, Oil sands, premium valuation, SAGD, Share Buybacks, takeover target | Login |
| Jul 25, 2025 | Fund Letters | Open Insights Capital | OXY | Occidental Petroleum Corporation | Energy | Oil & Gas Exploration & Production | Bull | New York Stock Exchange | carbon capture, CCUS, Climate Technology, Direct Air Capture, enhanced oil recovery, Permian Basin, Sustainable aviation fuel, tax credits | Login |
| Jan 25, 2025 | Fund Letters | Open Insights Capital | OXY | Occidental Petroleum Corporation | Energy | Oil, Gas & Consumable Fuels | Bull | NYSE | carbon capture, CCUS, deleveraging, energy, Equity, Oil & Gas, synergies, Value | Login |
| Jan 25, 2025 | Fund Letters | Open Insights Capital | MEG.TO | MEG Energy Corp | Energy | Oil, Gas & Consumable Fuels | Bull | TSX | Canadian Energy, Equity, Free Cash Flow, M&A Target, Oil sands, production growth, Share Buybacks, Value | Login |
| TICKER | COMMENTARY |
|---|---|
| OXY | As we hoped, OXY finally showed what it's capable of, demonstrating the company's ability to leverage its vast operations and generate significant cash flow. More importantly, this management team finally got out of its own way, shelving its original capex plans for growth, and instead slashed budgets so that it would generate an extra $1.2B of FCF in 2026. After finding religion, the market rewarded the decision and sent the stock up 10% in February to ~$50/share. Given our levered position (as we hold OXY warrants), we did slightly better. The war's impact further rallied the shares, and it ended the quarter at $65/share. At $65/barrel, OXY will generate about $5.2B in free cash flow, and at a 10x multiple, it justifies the $50 market cap. For simplicity, every $10/barrel increase in oil prices translates to ~$2.5B in FCF. If oil settles long-term at ~$80/barrel, we're looking at an $80/share OXY stock. The warrants, which allows us to buy the OXY shares for $22/share would increase ~60% from today's $35 to $58. As oil prices climbed we added to our holdings this quarter. |
| RIG | RIG itself came out of COVID heavily indebted, and with the threat of insolvency the shares cratered to around $2.13/share. By 2025, drillship owners had idled or retired enough vessels that the market became better balanced. Despite the company's improving fortunes, debt loads and liquidity concerns still dominated. This all changed, however, when RIG announced the transformative acquisition of VAL on February 9th. The acquisition will effectively deleverage RIG, and the surviving entity will be on much better financial footing. RIG comes into the marriage with ~$5B of net debt and ~$700M in FCF last year, whereas VAL brings only $0.5B of net debt and ~$340M of FCF. New-RIG is also projected to earn $1.4B in FCF after certain internal cost savings and synergies are achieved. By further consolidating the drillship space, the company should have more control over pricing and utilization. |
| VAL | VAL is a US company that owns and leases out 15 drillship and 31 jackups to energy producers worldwide. Under the proposed transaction, VAL shareholders will receive 15.235 RIG shares for every share of VAL. The transaction essentially slams two similarly sized companies together, one highly indebted (RIG), but with more valuable and advanced drillship that command higher rents, with a lightly indebted company (VAL) with fewer drillship and cheaper/cash flowing jackups. VAL historically was known to prioritize utilization and not pricing. Once RIG closes the transaction, it can better control the economics of the larger fleet and attempt to raise prices as producers increase production following the war. We acquired the shares on February 9th at an average price of $81.10/share. Given the 15.235 exchange ratio, we've effectively bought RIG at $5.32/share once the merger closes. |
| PTON | We've fully exited our position in Peloton. After a lackluster quarterly report, share prices declined from $6.16/share at the start of the year to $4.10/share, where we exited. Yes, we took the loss on the position that in our folly had sized-up during the quarter. Our models were to optimistic on subscriber counts, and heading into the quarter, we forecasted lower subscriber losses than the company had guided to. When the numbers fell short, the stock promptly fell by 30%. If the economy and consumers weaken because of high energy prices, PTON with its $2,000 bikes and $50/month subscription price will have a tougher time attracting and retaining subscribers. Although we're still bullish on the company's overall prospects, the economic backdrop gives us pause. So in an abundance of caution, we've sold. |
| INTU | We made some initial exploratory forays into some Software as a Service names such as Intuit (INTU) and Atlassian (TEAM), but they were small, and we've since sold them for a small gain, opting to slim down the portfolio to energy names in this environment. |
| TEAM | We made some initial exploratory forays into some Software as a Service names such as Intuit (INTU) and Atlassian (TEAM), but they were small, and we've since sold them for a small gain, opting to slim down the portfolio to energy names in this environment. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
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| No industry data available | |||
