After the end of each quarter hedge funds disclose their most important long stock positions at the U.S. Securities and Exchange Commission. Our research has shown that, the most popular small-cap stocks among hedge funds have outperformed the market by an average of 18 percentage points per year, same as large-cap stock picks. However, margins in these last ones are substantially smaller, but still worthy. In fact, we have accomplished returns of 69% -since August 2012- by imitating hedge fund picks.
In a previous article, we presented the five most popular technology stocks among hedge funds. In this case, we will present the top five energy picks among hedge funds; and they will probably surprise you.
The energy segment has seen considerable hedge fund activity during 2013’s third quarter. In fact, at least 60% of the -more than 300- companies that we track in these industries experienced increased “hedgie“ bullishness over the quarter.
The front-runner position was quite disputed: Anadarko Petroleum Corporation (NYSE:APC) lost its place to a larger competitor: Schlumberger Limited. (NYSE:SLB). By the end of the quarter, 75 major funds held long positions in Schlumberger. Among them, we would like to highlight Ken Fisher‘s Fisher Asset Management: the largest bull, with a stake worth more than $350 million. Trailing Fisher, also worth mentioning is Ken Griffin‘s Citadel Investment Group, which holds more than $230 million in stock, and just recently increased its position considerably, to about 2.67 million shares.
The second place in our list was even more contested than the first one. In fact, three companies are tied here, with 74 funds betting on each one: Anadarko Petroleum Corporation (NYSE:APC), Occidental Petroleum Corporation (NYSE:OXY), and Hess Corp. (NYSE:HES).
In order to still provide some kind of ranking, we decided that we would break the deadlock by assigning the second spot to the company that experienced the largest increase in hedge fund bullishness over the quarter: Hess Corp. (NYSE:HES). This exploration, production, marketing and refining company saw its bull count increase by 14 funds over Q3. This was the case for Paul Singer‘s Elliott Management, the most prominent institutional investor, which upped its bet to more than $1.3 billion, or 17 million shares.
In the third place, with 74 funds backing it up, compared to 63 by the end of Q2, is Occidental Petroleum Corporation (NYSE:OXY). This $75 billion independent E&P company can count Robert Rodriguez and Steven Romick‘s First Pacific Advisors Llc and Jean-Marie Eveillard‘s First Eagle Investment Management among its bulls, holding roughly 4 million and 2.24 million shares, respectively.
Anadarko Petroleum Corporation (NYSE:APC) plummeted in our list, from the first to the fourth position. Nonetheless, it saw 9 new hedge funds starting positions during the third quarter. Institutional backers now add up to 74, and include Jonathon Jacobson’s Highfields Capital Management (3.9 million shares) and Citadel Investment Group (2.5 million), among several other prominent funds.
Last in our list is Halliburton Company (NYSE:HAL), an oilfield services provider with a market cap of more than $46 billion. Over the past quarter, it witnessed the arrival of 6 new hedge funds; bulls now amount to 68. Glenn Greenberg‘s Brave Warrior Capital, Leon Cooperman‘s Omega Advisors, and Citadel Investment Group are the top 3 of them, holding 4.7 million, 3.6 million, and 3 million shares each, respectively.
Exxon Mobil Corporation (NYSE:XOM), the largest energy company in the world, came in only sixth, with 65 funds betting on its growth – 5 more than on Q2. Although we could not omit mentioning that Warren Buffett is Exxon’s largest investor -he owns more than 40 million shares, it seems like there is more growth contained in some smaller companies in the energy segment –or, at least, this is what “hedgies” believe.
Disclosure: Javier Hasse holds no position in any stocks mentioned.
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