A bet most on Wall Street were not willing to make. When Old West Investment Management, a small Los Angeles based hedge fund overseeing roughly $1 billion in assets, decided to dramatically increase its exposure to energy stocks, few in the industry were cheering them on. Oil was trading around $60 a barrel, sentiment toward the sector had turned deeply negative and most analysts were forecasting that new supplies combined with slowing global demand would push prices even lower.
Chief investment officer Brian Laks saw things differently. He and his team believed the bearish mood had gone too far and no longer reflected the true longer-term fundamentals of the energy market. So Old West did something contrarian: it shifted its energy holdings from a single-digit percentage of its portfolio to more than 30% of total investments.
That call, made well before any major geopolitical upheaval, proved to be one of the most well-timed investment decisions of the year.
How a 31% return came together
By the end of February, Old West’s flagship fund had posted a 31% return for the year, a figure that turned heads across the industry. Notably, those gains arrived even before the most dramatic catalyst hit: a U.S. and Israeli military campaign targeting Iran that sent oil prices, surging past $110 a barrel and effectively shut down a critical regional shipping lane.
Several developments along the way helped build the position’s momentum. The Trump administration’s removal of former Venezuelan president Nicolás Maduro, a hardline U.S. posture toward Iran and the compounding weight of sanctions on Russian energy exports all contributed to pushing oil prices steadily higher before the conflict fully escalated.
The final result was a fund return that outpaced some of the most recognized names in finance. 1. Pierre Andurand’s main hedge fund, run by the widely followed oil trader, gained 19% through March 13. 2. RCMA Capital’s Merchant Commodity Fund returned around 20% through early March. 3. Citadel’s Wellington fund posted just 2.9% through the end of February. 4. Balyasny Asset Management’s Atlas Enhanced fund was up only 0.4% over the same stretch.
For a small Los Angeles firm, those comparisons represent a remarkable outcome.
What powered the thesis and where Old West looks next
Old West’s bold oil bet paid off with a 31% fund gain. Old West’s energy pivot was never purely a geopolitical wager. The underlying logic was grounded in valuation. The S&P 500 Energy Index gained just over 2% across 2023 through 2025, a sharp contrast to the broader S&P 500’s 78% rise over the same period. To Laks and his team, that divergence signaled that energy stocks were trading well below what long-term supply and demand fundamentals actually supported.
As the firm leaned into energy, it simultaneously trimmed positions in areas that had already performed strongly, including precious metal miners. Old West had also benefited the prior year from gains in critical minerals and magnet companies that surged after the U.S. government took equity stakes in them. Gold, which had climbed to a peak in January, has since pulled back amid growing concern that central banks may lift interest rates to contain an oil-driven inflation surge.
The current portfolio includes stakes in five energy companies: 1. Canadian Natural Resources, 2. Murphy Oil, 3. Suncor Energy, 4. SLB and 5. PBF Energy names Laks believes still carry meaningful upside despite strong recent performance.
His longer-term conviction extends beyond the current conflict. Artificial intelligence data centers, which require enormous amounts of electricity, are expected to sustain robust demand for natural gas for years ahead. In Laks’ view, the physical infrastructure underpinning the modern economy pipelines, oil wells and railroads sits among the most durable beneficiaries of the AI buildout.
The contrarian energy bet that drew skepticism just months ago is drawing far fewer doubters today.
