In this article, via an analysis based on the latest available Q1 institutional 13-F filings, we identify the integrated oil & gas company stocks that are being accumulated and those being distributed by the world's largest fund managers. This is part of a series focusing on the investing activities of mega fund managers in the energy sector, including a prior article that focused on their investments in the small-cap oil & gas exploration & production companies.
These mega fund managers, such as Fidelity Investments, Goldman Sachs (GS), BlackRock Inc. (BLK), Vanguard Group, and 22 others, manage between $100 billion and over $1 trillion each, and together control about 40% of the assets invested in the U.S. equity markets. Together, these mega fund managers are bearish on the integrated oil & gas group, cutting a net $862 million in Q1 from their $265.78 billion prior quarter position in the group (for more general information on these mega funds, please look at the end of the article).
The following are the integrated oil & gas companies that these mega fund managers are most bullish about (our coverage of the group for the prior quarter can be found here):
Suncor Energy Inc. (SU): SU is an integrated energy company, engaged in the development of petroleum resource basins in Canada's Athabasca oil sands; acquisition, exploration, development, production and marketing of crude oil and natural gas in Canada and internationally; transportation and refining of crude oil; and marketing of petroleum and petrochemical products primarily in Canada. Mega funds together added a net 21.36 million shares in Q1 to their 358.68 million share prior quarter position in the company, and taken together mega funds held $11.00 billion or 24.4% of the outstanding shares.
The top buyer was mutual fund powerhouse Fidelity Investments, with $555 billion in 13-F assets, that purchased 20.93 million shares. Other large mega fund purchasers included AllianceBernstein (3.34 million shares), with $99 billion in 13-F assets, and the world's largest and most prominent asset manager, Blackrock Inc. (2.33 million shares), with over $3.5 trillion in assets under management.
In its latest Q1 (March), SU beat analyst earnings estimates (85c v/s 84c). Its shares trade at 8-9 forward P/E and 1.1 P/B compared to averages of 7.2 and 1.7 for its peers in the integrated oil & gas group, while earnings are projected to fall from $3.53 in 2011 to $3.35 in 2013.
Other integrated oil & gas companies that mega fund managers are bullish about include:
- Integrated oil and gas company Chevron Corp. (CVX), in which mega funds together added a net 6.21 million shares to their 697.60 million share prior quarter position in the company; and
- BP Plc (BP), that is a Britain-based leading international integrated oil and gas company engaged in the exploration, production, refining, marketing and transportation of oil and gas globally, in which mega funds together added a net 11.59 million shares to their 178.20 million share prior quarter position in the company.
The following are integrated oil & gas companies that mega funds are bearish about (see Table):
- Exxon Mobil Corp. (XOM), a world leader in energy exploration and production, in which mega funds together cut a net 5.31 million shares from their 1.24 billion share prior quarter position in the company;
- Integrated oil & gas company Hess Corp. (HES), in which mega funds together cut a net 8.99 million shares from their 113.67 million share prior quarter position in the company;
- Royal Dutch Shell Plc (RDS.A), that 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, in which mega funds together cut a net 5.22 million shares from their 161.90 million share prior quarter position in the company;
- Petroleo Brasileiro SA (PBR): PBR is a Brazilian company engaged in the exploration, production, supply and distribution of oil and gas in Brazil and abroad, in which mega funds together cut a net 9.67 million shares from their 584.78 million share prior quarter position in the company; and
- Total SA (TOT), that is a Paris-based Total is an international integrated oil and gas company that operates through three segments, namely upstream, downstream and chemicals, in which mega funds together cut a net 3.91 million shares from their 57.28 million share prior quarter position in the company.
Furthermore, the following are additional integrated oil & gas companies that are among the top holdings of mega funds in the group (see Table):
- Marathon Oil Corp. (MRO), that is a U.S. integrated oil and gas company engaged in worldwide exploration, production, refining, transportation and marketing of crude oil and natural gas, in which mega funds together hold 281.68 million or 39.9% of the outstanding shares;
- Questar Corp. (STR), an integrated natural gas-focused company engaged in production, transportation, storage, field services, and retail distribution, in which mega funds together hold 57.10 million or 8.0% of the outstanding shares;
- Statoil ASA (STO), a Norwegian integrated energy company, engaged in the exploration, production, transportation, refining, and marketing of petroleum products globally, in which mega funds together hold 22.35 million or 0.70% of the outstanding shares; and
- Chinese integrated oil and gas company Petrochina Co. Ltd. Adr (PTR), in which mega funds together hold 3.31 million or 0.2% of the outstanding shares.
General Methodology and Background Information: The latest available institutional 13-F filings of the largest 25 mega hedge fund and mutual fund managers were analyzed to determine their capital allocation among different industry groupings, and to determine their favorite picks and pans in each group. These mega fund managers number less than one percent of all funds and yet they control almost half of the U.S. equity discretionary fund assets. The argument is that mega institutional investors have the resources and the access to information, knowledge and expertise to conduct extensive due diligence in informing their investment decisions. When mega Institutional Investors invest and maybe even converge on a specific investment idea, the idea deserves consideration for further investigation. The savvy investor may then leverage this information either as a starting point to conduct his own due diligence.
This article is part of a series on institutional holdings in various industry groups and sectors, and other articles in the series for this and prior quarters can be accessed from our author page.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our 'opinions' and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.