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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"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."
Open Square Capital maintains a bullish outlook despite trade war disruptions, believing the US economy will run hot driven by lower taxes, reduced regulations, and pro-growth policies. The fund's largest position MEG Energy is subject to a hostile takeover by Strathcona Resources at a 9.3% premium, which the manager views as inadequate given historical 20-40% premiums for oil sands assets. Oil markets experienced significant inventory builds of 220M barrels in H1 2025, primarily in China due to trade uncertainty, but the manager expects supply tightening as US shale production declines with rigs down over 10% year-over-year. Occidental Petroleum benefits from enhanced carbon capture tax credits raised to $180 per metric ton for enhanced oil recovery applications. Key risks include fiscal deficits approaching $40T and trade friction increasing business costs. The manager expects economic growth to accelerate in coming quarters, driving energy demand higher while supply constraints emerge from declining US production and OPEC+ production management.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
The manager demonstrates high conviction through concentrated positions, explicit 'All-in' language, and detailed analysis supporting their contrarian view on oil supply tightening. They provide specific catalysts and refuse to tender shares despite takeover pressure.
Growth Outlook
The manager expresses strong optimism about US economic growth prospects, stating the economy will 'run hot' and 'redline' with pro-business policies. Despite trade war concerns, they believe in American exceptionalism and expect growth to make fiscal issues politically viable.
Risk Appetite
The manager maintains concentrated positions in energy names and refuses to tender MEG shares, showing conviction in their thesis. However, they acknowledge trade war friction and inventory builds, suggesting a measured rather than aggressive risk posture.
Capital Deployment
The manager is holding existing positions rather than actively deploying new capital. They are waiting for better pricing on MEG Energy and maintaining current oil positions, suggesting a patient approach rather than aggressive deployment.
Forward Guidance
The manager explicitly states they are 'All-in' on US growth prospects and expects to benefit from oil supply tightening. They anticipate announcing new developments for Occidental's carbon capture facility and expect higher takeover premiums for MEG Energy.
Language Signal
Language is predominantly bullish with phrases like 'All-in', 'run hot', 'unleash economic growth', and 'American exceptionalism'. While acknowledging risks, the overall tone emphasizes opportunities and upside potential in their investment thesis.
Perceived Risk
The manager acknowledges trade war friction, fiscal deficits approaching $40T, and oil inventory builds, but frames these as manageable or temporary issues. Risk discussion is present but not dominant in the overall narrative.
Opportunity Density
The manager sees abundant opportunities in energy sector driven by supply constraints, enhanced tax credits for carbon capture, and M&A activity in oil sands. They view current market conditions as creating attractive entry points.
Time Horizon
The manager takes a multi-year view on oil supply dynamics, MEG Energy's buyback potential over 5 years, and long-term carbon capture development. They demonstrate patience in waiting for proper valuations rather than rushing transactions.
