John H. Scully‘s SPO Advisory Corp has reported an increase in its position in Oasis Petroleum Inc. (NYSE:OAS). According to a filing with the Securities and Exchange Commission, SPO Advisory currently holds 10.11 million shares of the company, up from 7.98 million shares held earlier. Following the increase, the stake amasses 10% of Oasis Petroleum’s outstanding stock.
John Scully founded SPO Advisory Corp in 1990 together with the late William Patterson and William Oberndorf. The fund made its name a couple of years later with an investment in Plum Creek Timber Co. Inc. (NYSE:PCL), in which it held a 27% stake. As of the end of the third quarter of last year, SPO Advisory holds a concentrated equity portfolio valued at $7.70 billion. The portfolio is primarily represented by technology, services, financial, and basic materials stock. The largest position is represented by Charter Communications, Inc. (NASDAQ:CHTR), of which the fund held 8.67 million shares as of the end of September, while the stock jumped by some 20% over the last year. Charles Schwab Corp (NYSE:SCHW) and Equinix Inc (NASDAQ:EQIX), other two top picks from SPO’s 13F portfolio, have gained some 13% and 23% respectively.
Oasis Petroleum Inc. (NYSE:OAS) has been recently re-added to SPO Advisory’s equity portfolio. The fund has held shares of the company up until the first quarter of 2013 when it closed the stake. Previously, SPO has held over 9 million shares of the company. In the latest move, SPO initiated a new stake in Oasis as the company’s stock dropped by over 60% over the last 52 weeks on the back of oil price slump. The oil price declined by more than 40% since June 2014 and the near future doesn’t look very optimistic regarding a rebound. However, since oil is a cyclical commodity, the prices will jump back at some point, dragging oil stocks up as well.
In this way, big investors have been betting on oil stocks as they have been losing ground. As SPO added Oasis Petroleum to its equity portfolio in December 2014, another fund also initiated a stake. Dmitry Balyasny‘s multistrategy hedge fund Balyasny Asset Management initiated a 5.31 million shares position that represents 5.24% of the company’s outstanding stock. Mr. Balyasny also surged his exposure to another energy stock, NuStar GP Holdings, LLC (NYSE:NSH), to 2.15 million shares from 25,000 shares in October. In addition, recently, Steven Cohen of Point72 Asset Management initiated and raised its position in Jones Energy Inc (NYSE:JONE) to 724,600 Class A Common Shares, representing 5.7% of the class.
Nevertheless, despite a decline in its stock price, Oasis Petroleum Inc. (NYSE:OAS) might attract the attention of investors. The company plans to increase its production capacity by up to 10% this year and it has a strong hedge position worth $249 million if WTI trades at $60 per barrel and $164 million if its price stands at $70. Moreover, the company has around $1.6 billion in liquidity.
However, analysts as they expect oil prices to decline further have recently downgraded the stock. Since the beginning of 2015, Citigroup has downgraded Oasis Petroleum Inc. (NYSE:OAS) to ‘Sell’ from ‘Neutral’, while Raymond James and Susquehanna downgraded it to ‘Outperform’ and ‘Neutral’ respectively. In addition, last month, Wunderlich Securities downgraded Oasis Petroleum to ‘Hold’ from ‘Buy’ and cut the price target to $13.00 from $47.00.
There is still some time required to see how SPO Advisory’s and other investors’ bets on Oasis Petroleum Inc. (NYSE:OAS) will play out, but the last round of 13F filings showed that investors are moving away from the stock. As of the end of September, 29 funds among those that we track reported long positions in the company, down by 6 over the quarter. One of the largest shareholders of the company is John Paulson’s Paulson & Co, which held 9.89 million shares as of the end of September, while other investors disclosed less significant positions. However, while Paulson inched down its position in the company, Lee Munder’s Lee Munder Capital Group raised its exposure by 80% on the quarter to 652,700 shares as of the end of September, while Clint Carlson’s Carlson Capital increased its position by 13% to 472,800 shares.
Disclosure: none
