Bearish FinTwit Oil Traders Make Millions On Oil's Collapse

While oil has been plunging, there has been one group of misfit traders who were short the commodity and are finally getting the credit they deserve: FinTwit's oil traders.

In fact, they were so pronounced in making the call to short oil, they got their own Reuters write-up recognizing their prognostications now that oil has plunged to about $20.

The article points out names like @WillRayValentin, a petroleum engineer who, among others, has amassed a following on Twitter due to his "unabashed and bearish" Tweets about the U.S. shale industry. 

And as their predictions of falling oil came true, the group was ringing the register on their long held short positions. Valentin made $4 million in just one week between March 9 and March 16 when oil crashed. 

Valentin, who wishes to stay anonymous for fear of "industry retribution", said:

 “I’ve made a lot more money shorting energy stocks than my entire career working 9-5. It was like picking money up off the street.”

Now posts by FinTwit names @HalliBu78316368, @Mr_Skilling and @EnergyCynic, along with Valentin, are gaining notoriety. 

Ethan Bellamy, energy sector analyst at RW Baird said:

 “If you want to know the real narrative in energy, particularly the bear arguments on investor relations, you have to be on Twitter.” 

Dan Pickering, founder and CIO at Pickering Energy Partners said that posts on FinTwit factor in his analysis:

 “There are absolutely institutional investors that follow this space. I’ve gotten questions about Mr. Skilling from my investor base.”

Back in October, the group set a target price of $0 on Whiting Petroleum. In April, the company filed for bankruptcy. At the time it filed, 30 of 31 brokerages polled by Refinitiv had a "hold" rating or better on the stock. 

The faux-Skilling handle went to war with Tallgrass Energy LP over guarantees of higher payouts for its management in a takeover by Blackstone. The battle helped raise Skilling's profile when, after pressure mounted from investors, the CEO stepped down and Blackstone offered concessions. 

The group says they couldn't have anticipated the coronavirus outbreak but say that the sharp move lower in oil is - and will - validate their long held belief that many U.S. shale companies can't handle a major shock. 

Twitter user @HalliBu78316368 concluded: “When oil was at $100 it was more difficult to identify the bad companies. We are finally at a point today where we can start recognizing good and bad companies.”