Mr. Mitchell: The Mitchell Group is a registered investment adviser that invests exclusively in publicly traded energy securities. Accordingly, our focus is on the oil and gas area. We have not participated in coal but are looking at alternative energy ideas. Unfortunately, we have not found one that doesn't require significant government subsidies and we don't invest under those conditions. At the moment we think that oil, at $34 a barrel this morning, is underpriced; if not the case, in the future this would create an even more severe supply challenge.
TWST: Would you take us through the events of the last few months of this
economic downturn, with regard to the price of oil and gas?
Mr. Mitchell: We thought that oil at $147 was preposterous, and anticipated it
was going to back off to $60. Since we are often mandated by clients to be fully
invested, we did not go to cash. Instead we went to those stocks with limited
exposure to crude that we thought would provide some downside protection in such
circumstances, such as pipeline companies. They didn't provide any downside
protection at all. Everything went down at the same pace. As an index, our
clients use Dow Jones equal weighted oil and gas group. It was the only time in
my life that we have ever outperformed our benchmark index by over 2000 basis
points, and felt we had done a horrible job.
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