Louis Bacon manages $15 billion at Moore Capital Management, and his net worth has been estimated at $1.5 billion. Bacon received an MBA from Columbia and worked on the New York Cotton Exchange as a runner before founding Moore Capital in 1989. Bacon’s flagship fund Moore Global Investments has returned 31% annually since its inception in 1990 and was up 26% last year. According to Moore’s latest 13F, Bacon and his team have five energy stocks that they appear to be big fans of (check out Louis Bacon’s newest picks).
The oil and gas industry has seen strong production growth namely in onshore U.S., where many of the gas-heavy portfolio exploration and production companies have started making a switch toward unconventional oil and natural gas liquids. Oasis Petroleum Inc. (NYSE:OAS) is an independent exploration and production company focused on the development and acquisition of unconventional oil and natural gas resources in Montana and North Dakota. For the nine months ended September 2012, Oasis posted net income of $1.01 per share compared to $0.54 per share for the same period a year ago. Oasis trades near the top end of the industry at 30x earnings and 11x cash flow, but it appears these high multiples are justified by its 35% expected annual EPS growth over the next five years. Also boding well for the energy company is its industry-leading 70% EBITDA margin.
Devon Energy Corporation (NYSE:DVN) is another Bacon pick and is expected to see 2012 production up across the board – 21% for oil and 10% for natural gas liquids. Devon is one of the top onshore exploration companies, having sold off various offshore assets to boost its onshore portfolio. The energy company sold off $10 billion of assets from the Gulf of Mexico and Brazil, and plans to use upwards of $8 billion for buying up onshore assets. One of Devon’s newest initiatives is in the Canadian oil sands, with its Jackfish project and new joint-venture in the Kirby Oil Sands. This should boost oil sands exposure, where it sees 20% annual production growth through 2020. Billionaire T. Boone Pickens is one of Devon’s big-name investors (check out T. Boone Pickens’ newest stock picks).
Marathon Oil Corporation (NYSE:MRO), meanwhile, pays the highest dividend yield at 2.2% of Bacon’s five stocks listed here. Again, like the other major energy companies, growth for Marathon is expected to be driven by onshore production. The energy company expects 2013 production to be up 8% on the back of a 5% rise in CapEx – up to $5.2 billion. Like other major oil and gas companies, Marathon plans to make a near-term push toward onshore, with 55% of CapEx being allocated toward this area. Marathon also expects robust long-term production growth – expected to come in at 7% annually through 2017. Ken Griffin – founder of Citadel Investment Group – was Marathon’s top fund owner of those we track with over 4 million shares last quarter (check out Ken Griffin’s new picks).
What about the remaining two picks?