The long term outlook for oil and natural gas stocks is bullish.  Many other articles on this site have reviewed how well these assets have performed.  At present, however, major oil firms such as BP (NYSE: BP), Total SA (NYSE: TOT), and Hess (NYSE: HES) are off in recent market action. But small cap oil and natural gas entities such as Octagon 88 (OTC: OCTX) and Americas Petrogas (OTC: APEOF) are doing well.

There are many reasons for that.

Much of the publicly traded stock of major oil firms like Total SA, Royal Dutch Shell, and BP is owned by institutional investors such as mutual funds and pension groups.  When a sector falls from favor, there will be selling.  That can result in prices dropping for reasons having nothing to do with the intrinsic value of the stock.  For long term investors, that makes oil stocks more appealing as the dividend income is higher as a percentage.

But small cap oil and natural gas companies like Americas Petrogas and Octagon 88 are generally not owned by institutional investors.  Pension groups, hedge funds, and others will many times have limits on how small investments can be.  The market caps of Octagon 88 and Americas Petrogas will not be large enough.

But the investment features of these companies makes each appealing to buyers.

That has been shown by the stock performance of each.  In recent market action, Octagon 88 and Americas Petrogas have outperformed major oil concerns.  As an example, BP is down nearly 2% for the week.  For 2013, Total SA is off nearly 3%.  While that certainly does not diminish the long term investment appeal of those firms, it highlights the attractiveness of small cap oil firms like Octagon 88 and Americas Petrogas that outperform when Big Oil is off.