What Does Citadel Know About Natural Gas That You Don't?

The 🔥H.E.A.T.🔥 Formula : AI Driven Insights to Spark Your Portfolio

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Matthew Tuttle
March 17, 2025

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Market Recap

Nice rally, ostensibly because we avoided a government shutdown, but more likely the market was just short term oversold. Nothing in this chart screams V shaped recovery…..

If Friday was a bottom you’d really like to see some follow through this morning, which we don’t have at the moment.

The administration continues to tell us that Trump 1 is not the same as Trump 2….

But we do have FOMC this week along with a NVDA conference. Both of those events should be bullish, but that doesn’t mean they will be.

The next major opportunity for Huang to sell his story comes next week, when Nvidia’s annual conference takes over downtown San Jose, California, and plays host to business partners, startups and other spectators. About 900 companies are giving presentations about their use of Nvidia tech or participating in activities during the six-day event. In a keynote speech, Huang is expected to outline the many directions he’s leading Nvidia in search of the next frontier in AI.

Chips to be unveiled at developer conference expected to drive growth next year and beyond, but will depend on Big Tech’s spending spigot staying on full blast

President Donald Trump signaled to stock-market investors last week that they’re on their own. Federal Reserve Chair Jerome Powell will likely deliver a similar message when monetary policymakers meet this week.

A lot to like if you are a bull. NVDA pulled an undercut and rally…..

Seeing a lot of actionable charts on the long side, and not much left on the short side. The energy stocks I talked about on Thursday (more below) had great days, as did the P&C stocks I talked about Friday. I would love to get more precious metals exposure, just waiting for a pullback, but I am starting to eye other metals…..

If we did make a bottom, short term or intermediate term, then then quantum stocks could be in for another run. I picked up IONQ a couple of days ago on an undercut and rally at the 200 day…..

The mid cap defense names look like one of the strongest areas of the market. Been in KTOS for a bit….

And picked up RCAT Friday…..

And of course there are the European defense stocks…..

But it’s not just the prospect of further defense spending that’s enticing some traders to these ETFs. Matt Tuttle, chief executive officer at Tuttle Capital Management, says EUAD — which he helped bring to market — represents a “Trump trade” for many investors.

“The only real Trump trade right now is European defense companies,” he said in an interview. “There is all sorts of uncertainty about what Trump’s going to do, but one thing we know he is going to do is try to get European countries to pay more for their own defense.”

Investing Lesson Of The Day: Set It And Forget It Never Worked-WSJ

The Trump administration’s chaotic mix of tariffs and government budget cuts have jolted legions of everyday investors, leading them to question the assumption that they should buy and hold stocks on autopilot.

Can you just but stocks on auto pilot? Yes, over the long term the market goes up, I do not believe we have ever had a negative 25 year period on the stock market. However, we have had some pretty bad times and large drawdowns. Whenever I tweet about being more active with your investments someone inevitably hits me with the buy and hold always works statement. It depends on your definition of “works”. From the peak to trough in 2008 the market had a 60% drawdown. If you didn’t panic and sell, then it came back eventually but how do you not panic when you are down 60%? And, what about the lost opportunity cost of digging yourself out of that hole? Take 2000-2010, the market was flat over a 10 year period. Not my definition of “work”. Not saying you have to be a day trader but you should have some sort of strategy to shift to the most impactful themes and out of what isn’t working. You should also always have hedges for times like these. For more details on a way you can do this please register for our webinar on Thursday above.

Natural Gas: Citadel's $1.2B Acquisition Reinforces Energy’s Central Role in the AI Revolution

In Thursday’s note I talked about the AI power names. This is the main way I want to play AI at the moment because I don’t think it matters whether China wins or the US wins, we still need more power. I also believe nuclear is the future,

but the present is natural gas and coal. Citadel venturing into natural gas therefore caught my attention. I had GPT analyze the move…..

Citadel, the financial giant led by Ken Griffin, through its affiliate hedge fund, recently announced the $1.2 billion acquisition of natural gas assets in the Haynesville shale region, according to Hart Energy. This strategic acquisition includes Paloma Natural Gas, LLC’s approximately 60 undeveloped locations within the prolific Haynesville basin, signaling confidence in natural gas as a critical infrastructure investment.

What's the Strategic Rationale Behind Citadel's Acquisition?

Citadel’s acquisition underscores a growing thematic recognition of natural gas as a foundational fuel in the ongoing artificial intelligence (AI) infrastructure build-out. The unprecedented computational power required by AI data centers demands substantial and stable sources of electricity—natural gas offers a relatively reliable, scalable, and dispatchable energy source that complements intermittent renewables like solar and wind.

Why Natural Gas for AI?

AI-driven data centers consume enormous amounts of electricity—often equivalent to small cities. With the rapid build-out of AI infrastructure and data centers by companies like Microsoft, Google, Amazon, Nvidia, and others, energy requirements are expected to rise exponentially. Renewable energy alone is insufficient, as its intermittency creates risks for uninterrupted, high-demand computing needs. Natural gas, particularly from easily scalable and geographically advantageous fields like Haynesville, provides the stable, on-demand energy critical for consistent AI operations.

Strategic Ramifications

Citadel's investment sends a powerful signal to the broader market:

  • Natural Gas as a Strategic Asset: This substantial investment by a sophisticated financial entity underscores that natural gas remains a core long-term strategic asset.

  • Energy Security & Domestic Production: Haynesville's proximity to Gulf Coast LNG export terminals further enhances its strategic value, given geopolitical tensions and the increasing global competition for energy security. Trump's energy policies and geopolitical concerns amplify this trend.

  • Resurgence in Shale Valuations: Citadel’s entry could signal renewed investor interest and price support for natural gas assets in general, helping revalue shale plays positively.

Winners and Losers in the Public Markets

🟢 Potential Winners:

  • EQT Corporation (EQT): Largest natural gas producer, benefits from increased valuation multiples due to renewed attention in the natural gas sector.

  • Antero Resources (AR): Pure-play gas producer benefiting from improved sentiment towards natural gas assets.

đź”´ Potential Losers:

  • Coal Stocks (Peabody Energy (BTU), Arch Resources (ARCH)): Increased investor attention and capital flow to cleaner and more flexible natural gas as AI’s fuel source could exacerbate already negative sentiment toward coal.

  • Solar & Wind Pure-Plays (First Solar (FSLR), Sunrun (RUN)): While renewables maintain a long-term bullish narrative, short-term capital allocation toward natural gas may shift some sentiment from these names.

What's Driving the Acquisition?

Citadel's acquisition likely signals a bottoming in natural gas market sentiment. Natural gas prices have faced sustained pressure over recent months, driven by:

  • Warmer Weather Patterns: Reduced demand for heating during winter has pushed down natural gas pricing.

  • High Storage Levels: Inventories are currently above historical averages, pressuring spot prices.

  • Competition from Renewable Energy: Growth in renewables (particularly solar) creates competitive pressure.

However, these short-term headwinds may be overshadowed by longer-term bullish trends:

  • Export Capacity Expansion: Increased LNG export capacity from the U.S., particularly the Gulf Coast, should boost structural demand for natural gas.

  • Geopolitical Tensions: Ongoing geopolitical issues (Europe-Russia) reinforce long-term LNG demand.

  • Growing Electricity Demand from AI & Data Centers: Continuous infrastructure build-outs could catalyze future incremental demand growth.

Citadel’s timing suggests that natural gas prices may indeed be bottoming, presenting a strong contrarian signal that smart money views current pricing as attractive.

Conclusion & Investment Thesis

Citadel’s Haynesville purchase validates your thematic thesis that natural gas is a key strategic resource underpinning the explosive growth in AI infrastructure. From an intermediate-term perspective, sentiment for natural gas equities appears to be bottoming, especially relative to coal, which is structurally disadvantaged due to ESG pressures and inflexibility.

Your existing thematic positioning in natural gas—specifically through high-quality exposure to Haynesville and other shale operators—should benefit significantly from this fundamental trend. Conversely, investors should remain cautious on coal equities, as any bounce might represent a technical rebound rather than a durable trend reversal.

🏆 Key Takeaway:

Citadel’s sizable bet reinforces natural gas’s vital role in powering America’s technological future, particularly AI infrastructure. The strategic case for U.S. natural gas producers, especially those with prime shale exposure, continues to strengthen. Investors should consider tactical additions in natural gas equities aligned with the ongoing AI-driven energy revolution.

I do like both EQT and AR here…..

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