T. Boone Pickens is one of the top energy investors of the past decade. His investment strategy is quite straightforward. He forecasts the direction of energy markets and then makes outsized bets in stock, futures and derivatives markets. Depending on his call, he might go long or short.
We believe he is one of the hedge fund managers energy investors should follow closely. We also believe that the stocks that are favored by both T. Boone Pickens and other hedge fund managers will be less volatile and provide some downside protection in case Pickens’ forecast about the direction of the markets isn’t accurate. We compiled the list of stocks that had at least 15 hedge funds invested in with a total investment of at least $250 million. Both Pickens and hedge funds love these stocks:
CompanyName | Ticker | Value (x1000) | No. of Funds |
B P PLC | 1,749,031 | 41 | |
APACHE CORP | 1,802,685 | 41 | |
HALLIBURTON COMPANY | 893,531 | 39 | |
NATIONAL OILWELL VARCO INC | 1,311,698 | 39 | |
CHESAPEAKE ENERGY CORP | 3,403,693 | 38 | |
OCCIDENTAL PETROLEUM CORP | 2,586,603 | 36 | |
SUNCOR ENERGY INC NEW | 882,044 | 35 | |
DEVON ENERGY CORP NEW | 1,273,558 | 33 | |
SANDRIDGE ENERGY INC | 284,753 | 28 | |
PLAINS EXPLORATION & PROD CO | 605,149 | 25 | |
WEATHERFORD INTL LTD NEW | 449,565 | 25 | |
MURPHY OIL CORP | 320,654 | 22 | |
EOG RESOURCES INC | 730,653 | 21 | |
CANADIAN NATURAL RESOURCES | 978,743 | 20 | |
OCEANEERING INTERNATIONAL INC | 266,731 | 18 | |
MCMORAN EXPLORATION CO | 256,101 | 17 | |
NOBLE CORP BAAR | 335,086 | 17 |
British Petroleum and Apache Corp are the two most popular energy stocks among hedge fund managers. There were 41 hedge funds holding each stock at the end of March and the total value of hedge fund holdings was around $1.8 billion. Boone Pickens is bullish about both companies. He initiated his APA position during the first quarter and he also boosted his stake in BP by 18%. Bill Miller, Eric Mindich and David Einhorn are among BP's invetors (See Einhorn’s top stock picks).
Chesapeake Energy (CHK) was Boone Pickens’ largest position at the end of March. Other hedge funds were also very bullish about CHK, investing more than $3.4 billion in the company. Mason Hawkins, Israel Englander and Carl Icahn are among the CHK investors (Check out Icahn’s favorite stocks here).
Occidental Petroleum is another stock with tremendous hedge fund interest. Boone Pickens increased his bets on OXY by 65% during the first quarter. Hedge funds collectively invested more than $2.5 billion in OXY. Ken Fisher, Ralph Whitworth and Ric Dillon have very large bets on OXY. Occidental Petroleum is one of Ken Fisher’s favorite stock picks.
Recent interventions in the oil market by IEA and the Obama administration caused oil prices to decline. Energy stocks will be negatively affected by these interventions in the very short-term. However, these interventions are actually medium term bullish because it highlights the significance of supply problems in the industry. The declines in the short term may present attractive opportunities for energy investors with a longer-term investment horizon.
Disclosure: I am long CHK.
