Given his many decades of experience and tens of billions in net worth, Carl Icahn of Icahn Capital certainly knows how to invest. Over his storied career, Icahn has struck fear in both intransigent corporate management and competing corporate activists. In the process, Icahn has also won the hearts of many investors by unlocking value in many companies both in the short- and long-term.
In this article, we’ll put the microscope on some of Icahn’s favorite energy stocks, which include Cheniere Energy, Inc. (NYSEMKT:LNG), Freeport-McMoRan Inc (NYSE:FCX), CVR Energy, Inc. (NYSE:CVI), Chesapeake Energy Corporation (NYSE:CHK), and Transocean LTD (NYSE:RIG) and see how other hedge funds were positioned in them at the end of the second quarter.
While there are many metrics that investors can assess in the investment process, the hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor to beat the S&P 500 by around 95 basis points per month (see the details here).
#5 Transocean LTD (NYSE:RIG)
– Shares Held (as of June 30): 21.48 million
– Total Value (as of June 30): $255.37 million
Despite the fact that many in the industry expect utilization rates to bottom out by the middle of next year, Transocean LTD (NYSE:RIG) has retraced from its highs in early March. From March 31 through June 30, Icahn’s holding in the offshore driller remained unchanged at 21.48 million shares. Although there seems to be sharp resistance at $50 per barrel for WTI, Icahn seems confident in the value/optionality that Transocean offers. As Transocean has one of the stronger balance sheets in the sector, many traders think the company can survive until a time when crude prices go higher than $50 and offshore activity increases again.
#4 Chesapeake Energy Corporation (NYSE:CHK)
– Shares Held (as of June 30): 73.05 million
– Total Value (as of June 30): $312.65 million
Like Transocean, Carl Icahn kept his stake in Chesapeake Energy Corporation (NYSE:CHK) unchanged during the second quarter at 73.05 million shares. Since WTI bottomed out in February, Chesapeake has been one of the hottest stocks on the market, rallying from under $2 per share to around $7.35 per share (shares of the company are up by over 63% year-to-date due to the surge). Driving the bullishness is the belief that Chesapeake’s liquidity troubles are more and more in the rear-view mirror and that natural gas/WTI fundamentals are slowly but surely improving. Also lending a helping hand have been better-than-expected asset sales and falling well costs.
We’ll power through Icahn’s three favorite energy stocks on the next page.