Steve Cohen, the founder of the inactive hedge fund firm SAC Capital, currently manages his own family office hedge fund called Point72 Asset Management and has recently disclosed a 5% stake in WPX Energy Inc. (NYSE:WPX) in a 13G filing with the SEC. Subsequently, Steve Cohen augmented his position in the Tulsa-based energy company to 10.27 million shares, which yields an increase of 7.56 million shares since the latest 13F filing.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 142% and beating the market by more than 84 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
Steven Cohen, one of the most successful hedge fund managers in history, was the founder of SAC Capital hedge fund firm that is now called Point72 Asset Management after SAC was charged by the SEC with failing to prevent insider trading in 2013. By the end of the same year, SAC Capital agreed to plead guilty to insider trading charges and was prohibited to manage money for outside investors. SAC Capital was established in 1992 and its returns had been so massive that Steven Cohen could require a double industry average management fee of 3% and retain 50% of investment gains, compared to the traditional 20% in the industry. Although Steven Cohen returned the money to his outside investors and currently manages only his own wealth, he continues to be quite successful in generating enormous profits. Cohen’s Point72 Asset Management, which has $9-$10 billion in assets under management, has been almost as profitable as his former hedge fund. In the following article, we will discuss the aforementioned position in WPX Energy Inc. (NYSE:WPX) and will also take a brief look at other energy stock picks of Steven Cohen, which include the following companies: Renewable Energy Group Inc. (NASDAQ:REGI) and EQT Corporation (NYSE:EQT).
WPX Energy Inc. (NYSE:WPX) is an independent natural gas and oil exploration and production company, which engages in the exploration and development of unconventional properties in the United States. The shares of WPX Energy have increased by over 8% since the beginning of the year. Just recently, WPX Energy has announced that it completed a previously-declared sale of $200 million in assets in the Marcellus Shale. Therefore, this represents the company’s third divestiture this year as it attempts to lower its long-term debts and focus on its core operations. Precisely, WPX Energy Inc. (NYSE:WPX) intends to concentrate on developing its most profitable and efficient core oil and gas properties in North Dakota and New Mexico. The company has also some development plans for its natural gas operations in Colorado. Moreover, WPX Energy’s budget for 2015 reveals its plans to invest $725 million in its core assets by the end of the year. Having said that, it is quite evident that the company has decided to jettison its unprofitable and ineffective assets and focus on its efficient and resourceful core assets. The net proceeds from asset sales will not only allow WPX Energy Inc. (NYSE:WPX) to utilize the money for future acquisition deals and future capital investment, but will also enhance the financial flexibility of the company as it has used some of the proceeds to reduce its long-term debt.
Let’s take a glance of WPX Energy’s previous and expected financial performance. Analysts believe that the energy company will beat earnings estimate in the approaching second-quarter financial results as it has already posted better-than-expected results lately, especially when considering the previous two quarters. WPX Energy posted earnings per share of $0.09 for the first quarter of the year, beating the expected loss of $0.14 per share. At the same time, the company’s revenues for the quarter amounted to $572 million, slightly missing the estimate of $612 million. Concomitantly, the Earnings ESP, which stands for “Expected Surprise Prediction”, is positive for the company, which indicates that WPX Energy might represent a good buying opportunity at this point. According to our database, David Costen Haley’s HBK Investments is among the largest shareholders in WPX Energy Inc. (NYSE:WPX) with 4.93 million shares.