WTI crude futures fell below the $50 per barrel mark today as traders take profits and on the news that production from some DUC wells have hit the market. Adding to the selling is the prospect of a Brexit that might cause sentiment to soften. Among the stocks that investors are buzzing about today are three energy companies, Antero Resources Corp (NYSE:AR), Southwestern Energy Company (NYSE:SWN), and Antero Midstream Partners LP (NYSE:AM), along with two healthcare ones, Valeant Pharmaceuticals Intl Inc (NYSE:VRX), and Sophiris Bio Inc (NASDAQ:SPHS). Let’s find out why each stock is trending and see how the smart money is positioned in them.
Our research 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).
Financial Deal in the Energy Sector
Antero Resources Corp (NYSE:AR) is expanding after agreeing to purchase 55,000 net acres in West Virginia from Southwestern Energy Company (NYSE:SWN) for $450 million. Net production from the acreage has averaged 14 MMcfe per day and proved reserves from the deal were 11 Bcfe as of the end of 2015. Southwestern will use the cash proceeds from the sale to pay down the principal of its $750 million term loan due in November of 2018. Antero is making the deal to enhance its position as a pure-play Appalachian operator and to increase its growth. Due to the transaction, Antero is raising its 2017 production growth target to 20%-to-25%. The deal is good news for Antero Midstream Partners LP (NYSE:AM), whose services will be used for gas compression, gathering, processing, and water services. Antero Resources Corp (NYSE:AR) will finance the deal by issuing 26.75 million shares of common stock. Underwriters have the option to buy another 4.01 million shares.
Of the 766 active funds that we track, Antero Resources Corp was the most popular, with 30 elite funds holding shares of the company at the end of March. Southwestern Energy Company (NYSE:SWN) was second with 28 top funds holding shares, while Antero Midstream Partners LP (NYSE:AM) was last with just four funds owning its shares at the end of the first quarter. Shares of Antero Midstream have gained over 4% this morning, while shares of the other two companies are down by about 3%.
On the next page we examine why healthcare companies Valeant Pharmaceuticals and Sophiris Bio are in the news today.