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The bulls and the bears play together on Michael Santelli's team, and the strategy seems to work.
His four-star Allegiant Mid-Cap Value Fund is up an average of 17.4 percent per year over the last five years.
Santelli is an energetic supporter of Constellation Energy [CEG
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], a utility with two businesses, the regulated Baltimore Gas and Electric, and an unregulated power-generation business, where he sees the greatest opportunity.
"They do have a number of coal and nuclear-fired generation assets, and as the power cycle expands here, and we have power prices go up, we think those assets are going to be much more profitable, and throw off a lot more cash than is currently expected," he said.
His more bearish play is Pactiv [PTV
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], a plastics-packaging company that owns the Hefty brand of consumer products as well as a number of plastic items used in the food-service industry.
"Their basic cost is through plastic resin, which is a derivative of oil and natural gas, so in the short run, as oil and natural gas spike up, their margins are temporarily compressed," he said. "We believe, however, that those margins tend to stabilize over long periods of time, as they do get those costs passed through to their customer base."
In the short run, the cost spikes drive down the stock price, creating a buying opportunity.
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