(Clarifies that allocations to energy rose 1.1%, and returns totaled 16%.)

BOSTON ( TheStreet) -- Hedge fund firms' allocations to energy investments rose only 1.1% in the first quarter, even as oil stocks jumped, suggesting managers trimmed their stakes to lock in profits or avoid losses on expectations economic growth would slow.

Based on market value, energy stocks made up 12.7% of holdings of 2,918 hedge funds tracked by Bloomberg at the end of the first quarter, behind financials (21%) and information technology (17%). Industrials were the only other sector to show growth in the period, but at a mere 0.2%.

The notoriously cyclical energy stocks have given the funds a nice ride over the past year, gaining 16% in the 12 months through the end of the first quarter, three times the pace of the S&P 500 Index.

But, since then, they have tumbled 6.9%, and that raises the question of whether the decline sets up a good re-entry point for investors who believe energy prices will resume their increase, or represents a tipping point that indicates it's a good time to bail out of the sector.

A review of first-quarter transactions by hedge funds that made Securities and Exchange Commission 13F filings this week resulted in a hodge-podge of changes, but the trend was a sell-off of energy holdings.

Energy stocks seeing sales among the 65 largest holdings by hedge funds were: oil-services-industry provider Schlumberger ( SLB - Get Report), 8.6 million shares; international integrated oil and gas company ConocoPhillips ( COP - Get Report), 13 million; oil-and-gas exploration and production conglomerate Occidental Petroleum ( OXY); 11.6 million; mid-cap independent exploration-and-oil production company Apache ( APA), 1.6 million; and Canadian oil-and-gas producer Suncor Energy ( SU - Get Report), 10.3 million shares.

Those that saw buying were: oil-industry-services contractor Halliburton ( HAL - Get Report), up 68,000 shares, and Anadarko Petroleum ( APC - Get Report), one of the largest independent exploration-and-production companies in North America, which saw 7 million shares bought by the hedge funds.

Billionaire investor George Soros' hedge fund, Soros Fund Management, cut its energy allocation by 2.6% in the quarter, including trimming by 386 million shares a stake in small-cap Canadian oil-and-gas company InterOil ( IOC). But it remains the fund's second-largest holding, at 4.1% of the $7.4 billion portfolio.

And the Soros fund about doubled its stake in oil-field-services provider Weatherford International ( WFT), to 3.5 million shares worth $79 million. The company now makes up 1.1% of the portfolio.

Warren Buffett's Berkshire Hathaway ( BRK.A) cut its big ConocoPhillips stake by 8 million shares, which still left it with 29 million shares at quarter-end, which makes up 4.4% of the portfolio and is the fund's seventh-largest holding. Berkshire's investment in the integrated-oil company rose by $342 million in the quarter to $2.3 billion.

With an apparent bullish view on energy stocks, the $34 billion Paulson & Co. hedge fund firm's allocation to the industry rose 5.8% in the first quarter. Part of that is due to its higher stake in Transocean ( RIG - Get Report), an offshore drilling firm. Paulson & Co. bought 17 million shares, its biggest buy in the quarter. That brings the value of its Transocean stake to $1.9 billion, making it the fund's third-largest portfolio holding.

Third Point, a $2.4 billion hedge fund firm managed by Dan Loeb, was also bullish on energy as it saw the sector grow by 18% in the quarter. That was due, in part, to its initiation of a 2.5 million-share, $67 million stake in small-cap stock Tesoro ( TSO) , a refiner and retail marketer of petroleum products, as well as additions to existing holdings. Those include boosting its Marathon Oil ( MRO) stake by 900,000 shares to 1 million, and the oil refiner and retailer Sunoco ( SUN - Get Report) by 1.3 million shares, to a $98 million stake, representing 4% of the fund.

The $20 billion SAC Capital fund saw its energy allocation rise 1.2% in the quarter, helped by its addition of shares of Plains Exploration & Production ( PXP), an independent North American oil-and-gas company, and Murphy Oil ( MUR - Get Report), an integrated oil-and-gas company with production from fields in the U.S., Canada, Malaysia, the U.K. and Ecuador

The $4.1 billion Tiger Global Management fund held no energy stocks in its top 25 holdings and made no changes to the sector in the quarter.

The hedge funds couldn't seem to make up their minds on two of the largest, and most similar, oil-industry giants, Exxon Mobil ( XOM - Get Report) and Chevron ( CVX - Get Report).

See the following page to see how the two companies have fared.

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ExxonMobil ( XOM - Get Report), the second-largest stock by market value held by hedge funds, at $191 billion, saw almost 16 million shares sold by them in the quarter, although its market value to those same funds rose by a total of $24 billion in the period.

Exxon is an integrated oil-and-gas company, and the world's largest oil and specialty chemicals refiner. It has a market value of $395 billion.

Exxon's shares are up 11% this year and 29% over the past 12 months. Its shares are down 3.6% over the past three months.


Chevron ( CVX - Get Report), the fourth-biggest stock by market value held by the funds, at $130 billion, saw buying of 12 million of its shares in the first quarter and its value within the funds rose by $21 billion. The increase is due to share-price appreciation and the increased number of shares.

Chevron, with a total market value of $201 billion, owns exploration, production and refining operations worldwide.

Chevron shares are up 12% this year and 34% over the past 12 months. And its shares are up 5% over the past three months, while the integrated oil-and-gas companies' sector is down 8.3%, as tracked by Morningstar.

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