Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

5 Energy Stock Pick Ideas You Should Pay Attention To

Page 1 of 2

Russell Lucas‘ Lucas Capital, a fund with a focus on energy equities, especially in the North American market, recently filed its 13F with the SEC for the September quarter. The firm’s public equity portfolio stood at $172 million as of September 30, while it currently manages approximately $570 million across its various funds and other wealth management services. Russell Lucas founded the firm in 1996 with his father, George B. Lucas Jr, and continues to serve as its principle, alongside Ralf Sellig. Given the firm’s knowledge of the energy market, we wanted to take a look at its top picks for the fourth quarter, which are Plains GP Holdings LP (NYSE:PAGP), Western Gas Equity Partners LP (NYSE:WGP), Energy Transfer Equity LP (NYSE:ETE), ConocoPhillips (NYSE:COP) and EOG Resources Inc (NYSE:EOG).

Oil Drilling Rig Big

Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by 53 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. a 48.7% gain for the S&P 500 Index (see the details here). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).

Russell Lucas
Russell Lucas
Lucas Capital Management

#5 ConocoPhillips (NYSE:COP)

Shares held (as of September 30): 72,236
Total Value (as of September 30): $3.46 million
Percent of Portfolio (as of September 30): 2.01%

Lucas Capital bumped up its holding in ConocoPhillips (NYSE:COP) by 11% in the third quarter to 72,236 shares, good for around 2% of its equity portfolio. While ConocoPhillips is no longer an integrated and thus doesn’t have a refining division that benefits from low oil prices, analysts still think the company will be profitable next year, with predictions of EPS of $0.89 for the year. Given ConocoPhillips’ attractive dividend yield of 5.3% and the fact that crude prices will rebound eventually as low crude prices will effectively cure low crude prices by inhibiting production, we’re optimistic on the stock. First Eagle Investment Management owned 7.65 million Conoco shares at the end of June.

Follow Conocophillips (NYSE:COP)
Trade (NYSE:COP) Now!

#4 Energy Transfer Equity LP (NYSE:ETE)

Shares held (as of September 30): 169,160
Total Value (as of September 30): $3.52 million
Percent of Portfolio (as of September 30): 2.04%

Energy Transfer Equity LP (NYSE:ETE) shares have fallen by 27% year-to-date as sentiment has deteriorated despite the company announcing a deal to merge with Williams Companies Inc (NYSE:WMB) that should yield up to $2 billion in annualized EBITDA synergies by 2020. Because crude prices are less than half of what they were a year-and-a-half ago, investors are less optimistic on the future of U.S energy production growth. In addition, expectations of normalizing interest rates have weighed on shares. The company also reported mixed third quarter earnings, beating EPS expectations by $0.02 per share but missing revenue estimates by $1.83 billion. We’re still fans of the company, however, as the dividend yield of 5.67% is secure at the present moment.

Follow Energy Transfer Equity L.p. (NYSE:ETE)
Trade (NYSE:ETE) Now!

Lucas Capital’s top three energy stock picks light up the next page.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!