5 Energy Penny Stocks To Buy Now

Energy prices covering crude oil and natural gas continue to have wild swings and remain well off their levels from previous years, despite a mild rally this year. However, that has not stopped hedge funds from investing heavily in energy stocks, even in energy penny stocks. In this article, we’ll look at five energy penny stocks which hedge funds find attractive, and look at the latest developments concerning them.

The five energy penny stocks in which the hedge funds in our database have the most long positions are Bellatrix Exploration Ltd (NYSE:BXE), Basic Energy Services, Inc (NYSE:BAS), Harvest Natural Resources, Inc. (NYSE:HNR), Rex Energy Corporation (NASDAQ:REXX), and Triangle Petroleum Corporation (NYSEMKT:TPLM).

We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see more details).

Triangle Petroleum Corporation (NYSEMKT:TPLM)

– Hedge Funds with Long Positions (as of June 30): 5

– Value of Hedge Funds’ Holdings (as of June 30): $243,000

Triangle Petroleum Corporation (NYSEMKT:TPLM) is the first energy penny stock on our list, being held by five of the hedge funds that we track, which held 1.1% of its shares in aggregate on June 30. Ownership of the stock was down from eight hedge funds on March 31. Triangle Petroleum Corporation (NYSEMKT:TPLM) recently announced that it will be selling its fracking subsidiary RockPile Energy Services to private equity firm White Deer Energy for an undisclosed amount. In other news, oil production from North Dakota fell below one million barrels per day during August, according to the North Dakota Pipeline Authority. Triangle Petroleum is focused on assets in North Dakota’s Williston Basin.

Harvest Natural Resources, Inc. (NYSE:HNR)

– Hedge Funds with Long Positions (as of June 30): 5

– Value of Hedge Funds’ Holdings (as of June 30): $549,000

Harvest Natural Resources, Inc. (NYSE:HNR) is another energy penny stock which was held by five of the hedge funds that we track on June 30, down by one quarter-over-quarter. Harvest Natural Resources, Inc. (NYSE:HNR) recently announced the completion of the sale of its Venezuelan assets. The company received $80 million in cash and $12 million through six-month 11% notes payable by the purchaser, CT Energy Holding SRL. Debt of $30 million owed by Harvest Natural Resources, Inc. (NYSE:HNR) to CT Energy was also cancelled. The company plans to use the proceeds from the sale to reduce its debt and pay other expenses.

On the next page we’ll look at hedge fund sentiment towards Bellatrix Exploration, Rex Energy Corporation, and Basic Energy Services.

Rex Energy Corporation (NASDAQ:REXX)

– Hedge Funds with Long Positions (as of June 30): 5

– Value of Hedge Funds’ Holdings (as of June 30): $990,000

Rex Energy Corporation (NASDAQ:REXX) is the third energy penny stock in which five of the hedge funds that we follow owned shares of as of June 30. The company was recently upgraded to ‘Hold’ from ‘Sell’ by Stifel Nicolaus analyst Michael Scialla. Scialla said at the time that the OPEC agreement has built an oil price floor around the $40 mark, which ensures some needed stability for Rex Energy. The analyst also raised his price target on the stock to $0.52 from $0.50. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners opened a 71,306-share position in Rex Energy during the second quarter.

Basic Energy Services, Inc (NYSE:BAS)

– Hedge Funds with Long Positions (as of June 30): 5

– Value of Hedge Funds’ Holdings (as of June 30): $10.45 Million

Basic Energy Services, Inc (NYSE:BAS) is yet another energy penny stock which was owned by five of the hedge funds in our system. Hedge funds were much more bullish on Basic Energy Services however, owning over $10 million worth of its shares, more than five-times the amount of money held in the previous three stocks on this list combined. Those five funds owned 14.50% of the company’s shares at the end of June. Shares of Basic Energy Services have crumbled by 73% this year despite the strong performance of the overall energy sector, and the stock was recently replaced in the S&P 600 by Abercrombie & Fitch Co. (NYSE:ANF).

Bellatrix Exploration Ltd (NYSE:BXE)

– Hedge Funds with Long Positions (as of June 30): 7

– Value of Hedge Funds’ Holdings (as of June 30): $13.22 Million

Lastly is Bellatrix Exploration Ltd (NYSE:BXE), which was owned by seven hedge funds in our database on June 30, unchanged over the course of the second quarter, though the aggregate value of their holdings in it fell from $47.03 million to just $13.22 million during that time. The large decline was partly due to Seth Klarman’s Baupost Group selling off its 8.65 million Bellatrix shares during the quarter, which had been worth $8.74 million on March 31. Bellatrix Exploration recently announced that it would be raising $10 million through a private placement. The proceeds of the placement will be used to finance drilling and completion expenditures for the rest of the year. The 8.47 million shares issued under the private placement will have a holding period of four months.

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