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Energy Stock Favorites of Hedge Fund Managers (Update 1)

Stocks in this article: VLO XLE HFC KMI LNG EP HAL XCO RRMS GLNG

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  • Multi-quarter buying may be the best indicator of hedge fund managers' favorite energy stocks
  • The oil service stocks were dogs in the fourth quarter and that shouldn't surprise anyone given the bottoming out in the sector and the expectation that things got worse before they got better. In fact, it might be more interesting to see whether the hedge fund managers start adding back to some of their oil service stakes, like they have already done -- and were doing again in the fourth quarter with oil service stock Weatherford International (WFT), which was beaten up long before the rest of the sector due to company-specific missteps.

    SAC Capital, for example, while dumping Baker Hughes was adding to its Weatherford stake in the fourth quarter. Weatherford is now the hedge fund's third-largest holding after adding to its position three quarters in a row.

    Here are some of the other top hedge fund manager multi-quarter buys across the energy sector:

    Activist hedge fund Jana Partners has added to its stake in Anadarko Petroleum (APC) for two consecutive quarters.

    Pickers has lightened his exposure to EOG Resources (EOG) for three quarters, while U.S. independent exploration and production peers of EOG, Devon Energy (DVN), SandRidge Energy (SD) and Chesapeake Energy (CHK) remain among his top 10 holdings in the fourth quarter.

    Ray Dalio's Bridgewater Associates has been adding to its stake in U.S. independent E&P Denbury Resources (DNR) for three quarters.

    Denbury has been a popular way for energy investors to gain exposure to the mid-cap U.S. oil exploration story and the support for crude oil prices, with a unique production technique twist .

    In multi-quarter stock buying action like Denbury or Weatherford, a longer-term bias from the hedge fund managers may be revealed, as these stocks haven't moved up or down in a straight line in the past year.

    -- Written by Eric Rosenbaum from New York.

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    >To contact the writer of this article, click here: Eric Rosenbaum.

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