What do the world's largest money managers like in the integrated oil & gas group? Through research of the latest available Q4 institutional 13-F filings, we identify the integrated oil & gas stocks, including domestic and international companies, that are being accumulated and those being distributed by the world's largest fund managers, managing between $50 billion and over $700 billion in 13-F assets. Taken together these mega fund managers control over 35% of the assets invested in the U.S. equity markets, but number just over 30 out of the tens of thousands of funds that invest in the U.S. equity markets. Also, taken together, they are bearish on the integrated oil & gas group, cumulatively cutting $3.47 billion in Q4 from their $268.20 billion prior quarter position (for more general information on these mega funds, please look at the end of the article).
The following are the integrated oil & gas company stocks that these mega fund managers are most bullish about, that are undervalued compared to the peers in their group, and also have a high dividend yield (see Table):
Ecopetrol SA (EC): EC is a Colombia-based integrated oil & gas company operating in Colombia, Peru, Brazil and the U.S. Gulf Coast, and engaged in the exploration, production, refining and transportation of oil and gas. Mega funds together added a net $108 million in Q4 to their $352 million prior quarter position in the company, and taken together mega funds hold 0.4% of the outstanding shares. The top buyer was Vanguard Group, with $1.6 trillion in assets under management ($35 million), and the top holders were Neuberger Berman Group ($114 million) and mutual fund powerhouse Fidelity Investments, with $492 billion in 13-F assets ($95 million).
EC shares have performed well this year, up about 40% YTD compared to the flattish performance of the average energy stock during the same period. Its shares trade at a 12-13 forward P/E and 4.2 P/B compared to averages of 18.8 and 1.3 for international integrated oil & gas companies, and it has a high dividend yield of 6.3%.
Total SA (TOT): Paris-based Total is an international integrated oil & gas company that operates through three segments, namely upstream, downstream and chemicals, with the chemicals segment producing rubber, paint, ink, adhesives, and resins. Mega funds together added a net $91 million in Q4 to their $2.29 billion prior quarter position in the company, and taken together mega funds hold 2.1% of the outstanding shares. The top buyers were Bank of America, with $169 billion in 13-F assets ($67 million) and Fidelity Investments ($50 million), and the top holder was Wellington Management, with $254 billion in 13-F assets ($892 million).
Total trades at 6-7 forward P/E and 1.2 P/B compared averages of 18.8 and 1.3 for its peers in the international integrated oil & gas group, while earnings growth is projected at a modest 4.4% rate from $6.97 in 2011 to $7.59 in 2013, and it has a high dividend yield of 5.3%.
The following are some additional integrated oil & gas stocks that mega funds accumulated in Q4 (see Table):
- Williams Companies (WMB), an energy infrastructure company that owns and operating approximately 13,700 miles of natural gas pipeline system extending from Texas, Louisiana, Mississippi and offshore Gulf of Mexico through Alabama, Georgia, South Carolina, North Carolina, Virginia, Maryland, Pennsylvania, and New Jersey to the New York City metropolitan area. Mega funds together added a net $460 million in Q4 to their $6.22 billion prior quarter position in the company;
- Petroleo Brasileiro SA (PBR), a Brazilian company engaged in the exploration, production, supply and distribution of oil and gas in Brazil and abroad. Mega funds together added a net $332 million in Q4 to their $6.16 billion prior quarter position in the company;
- Integrated oil & gas company Chevron Corp. (CVX): mega funds together added a net $91 billion in Q4 to their $71.45 billion prior quarter position in the company; and
- Integrated oil & gas company Hess Corp. (HES): mega funds together added a net $40 million in Q4 to their $6.15 billion prior quarter position in the company.
Besides these, mega funds, based on their Q4 trading activity, indicated that they are bearish on the following integrated oil & gas stocks (see Table):
- Integrated oil & gas company ConocoPhillips (COP): mega funds together cut a net $2.80 billion in Q4 from their $30.90 billion prior quarter position in the company;
- Suncor Energy Inc. (SU) is an integrated energy company, engaged in the development of petroleum resource basins in Canada's Athabasca oil sands. Mega funds together cut a net $682 million in Q4 from their $10.07 billion prior quarter position in the company;
- Royal Dutch Shell Plc (RDS.A) is a leading Netherlands-based international integrated oil and gas company that is engaged in all phases of the petroleum industry from exploration to final processing and delivery. Mega funds together cut a net $524 million in Q4 from their $12.70 billion prior quarter position in the company; and
- Exxon Mobil Corp. (XOM), a world leader in energy exploration and production: mega funds together cut a net $391 million in Q4 from their $98.79 billion prior quarter position in the company.
Table
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Credit: Fundamental data in this article were based on SEC filings, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
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