Michael Burry, noted for his role in 'The Big Short,' attended its premiere at Ziegfeld Theatre in New York on November 23, 2015. Recently, his strategic investment approach, particularly his interest in Venezuelan oil, is drawing renewed attention.
The investor, known for his astute market predictions, disclosed that he has held shares in Valero Energy since 2020. This investment has become increasingly appealing as the U.S. positions itself to play a deeper role in rehabilitating Venezuela's oil sector. In a Substack blog post, Burry pointed out, "Realize that many Gulf Coast refineries were purpose-built for Venezuelan heavy crude. They've been operating with suboptimal feedstock for years, potentially leading to better margins in jet fuel, asphalt, and diesel production." He affirmed his long-term commitment to holding Valero shares.
Burry's comments followed encouragement from former President Donald Trump for U.S. oil companies to invest in Venezuela, following the removal of President Nicolás Maduro. Holding the world's largest proven crude oil reserves, Venezuela's oil is notably heavy and high in sulfur, requiring specialized refineries for efficient processing.
Valero Energy is particularly well-positioned due to its capability to process heavy crude. Burry mentioned that smaller refiners like PBF Energy and HF Sinclair might benefit too, despite a potentially slow increase in Venezuelan oil supplies. Any significant recovery in exports may be years away.
Analysts from Wall Street are emphasizing Valero as the primary company likely to profit if Venezuelan oil supplies grow. Valero's stock saw a roughly 10% rise on Monday.
Burry also sees potential beyond refining, in the form of opportunities for U.S. oilfield services companies, should Venezuela's neglected oil infrastructure begin a large-scale rehabilitation. He disclosed owning Halliburton and sees potential upside for other firms like Schlumberger and Baker Hughes, which could be involved in repairing pipelines and refineries.
"Venezuelan pipelines and refineries are old and in disrepair. This work will go to U.S. contractors," he noted. He drew attention to Chevron's presence in the region and mentioned the possibility of companies like Exxon achieving resolution on long-standing legal claims. "I own Halliburton, and may buy more shares or LEAPs." LEAPs are long-term options with expiration dates extending beyond a year.