Five Cheap Energy Stocks Poised to Explode

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#3 Transocean LTD (NYSE:RIG)

– Hedge Funds with Long Positions (as of June 30): 32

– Value of Hedge Funds’ Holdings (as of June 30): $720.6 Million

Moving on, the number of hedge funds covered by us that were long Transocean LTD (NYSE:RIG) came down by seven during the second quarter, but the aggregate value of their holdings in it jumped by $123 million during that time. While shares of Transocean LTD (NYSE:RIG) have fallen by 23% so far in the current quarter, most analysts and seasoned investors still consider it as the best offshore play. According to them, the company’s solid backlog that is expected to last more than a decade, its running contracts with oil majors, its focus on improving the efficiency of its fleet and an increase in demand for offshore drilling going forward will all contribute in pushing Transocean LTD’s stock higher in the coming quarters. On August 25, analysts at Citgroup Inc. upgraded the stock to ‘Neutral’ from ‘Sell’ and also hiked their price target on it to $11 from $7.

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#2 Noble Corporation Ordinary Shares (UK) (NYSE:NE)

– Hedge Funds with Long Positions (as of June 30): 33

– Value of Hedge Funds’ Holdings (as of June 30): $287.35 Million

Noble Corporation Ordinary Shares (UK) (NYSE:NE) is the only stock covered in this list that saw its ownership among hedge funds covered by us rise during the second quarter, by four, and the aggregate value of their holdings in it also increase during that time, by 58.5%. After the grand short squeeze that Noble Corporation Ordinary Shares (UK) (NYSE:NE)’s stock saw in early-March this year, it has been on a consistent downward journey and currently trades down 48.64% year-to-date. According to oil industry analysts, the September fleet status that Noble Corporation Ordinary Shares (UK) released recently is a testament that the offshore drilling industry is not experiencing a rebound and will continue to face cash flow and debt problems going forward. For its fiscal 2016 third quarter, analysts are expecting the company to report a loss of $0.17 per share on revenue of $420.94 million. For the same quarter of the previous year, Noble Corporation Ordinary Shares (UK) had posted EPS of $0.72 on revenue of $896.67 million.

#1 Whiting Petroleum Corp (NYSE:WLL)

– Hedge Funds with Long Positions (as of June 30): 41

– Value of Hedge Funds’ Holdings (as of June 30): $493.73 Million

Whiting Petroleum Corp (NYSE:WLL) was the most popular sub-$10 energy stock among hedge funds covered by us at the end of June. During the second quarter, the number of hedge funds we track that were long Whiting Petroleum Corp (NYSE:WLL) inched down by two, but the aggregate value of their holdings in it rose by 62.66%. Arvind Sanger’s GeoSphere Capital Management was one of the hedge funds that initiated a stake in the company during that period; it purchased 370,000 shares. The Colorado-based independent oil and gas company has lost more than 90% of its market capitalization since the second-half of 2014. However, the debt reduction that the company has done through asset sales, convertible notes and debt repurchases in the last few quarters has been appreciated by analysts and investors. The debt on Whiting Petroleum Corp’s balance sheet is down to $4.5 billion now from $5.6 billion at the end of its fiscal 2016 first quarter. Though most analysts don’t expect Whiting Petroleum Corp’s stock to appreciate much in the short-term due to potential dilution of shareholders’ equity from the convertible notes the company has issued, they think that it can see a significant upside in the long run if oil prices start moving higher.

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Disclosure: None

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