These 5 Energy Stocks Power the Portfolios of Elite Investors

#3 Anadarko Petroleum Corporation (NYSE:APC)

Number of Hedge Fund Holders (as of September 30): 70
Total Value of Hedge Fund Holdings (as of September 30): $3.38 billion
Hedge Fund Holdings as Percent of Float (as of September 30): 11.00%

Although Anadarko Petroleum Corporation (NYSE:APC) shares are down by 24% year-to-date due to weak WTI prices, many hedge funds are bullish. Among the funds increasing their positions in the third quarter was Phill Gross and Robert Atchinson’s Adage Capital Management and Ross Margolies’ Stelliam Investment Management. Keith Meister‘s Corvex Capital also established a new stake of 1.97 million shares. Anadarko shares have been volatile in recent weeks given the M&A rumors swirling around Anadarko and Apache Corporation (NYSE:APA), but will recover once WTI prices normalize. Analysts have an $83.97 consensus price target on the stock.

#2 Kinder Morgan Inc (NYSE:KMI)

Number of Hedge Fund Holders (as of September 30): 72
Total Value of Hedge Fund Holdings (as of September 30): $1.83 billion
Hedge Fund Holdings as Percent of Float (as of September 30): 3.00%

Although Kinder Morgan Inc (NYSE:KMI) is no longer an MLP, it is still a very attractive holding, with a dividend yield of 8.36% and durable, predictable cash flows. Because of the company’s dividend payout, 72 funds owned Kinder Morgan at the end of the third quarter, up from 64 funds long the stock at the end of June. Andy Raab’s FPR Partners raised its stake in the oil and gas midstream company by 22% during the quarter to 5.98 million shares. Look for Kinder Morgan Inc to rebound once Saudi Arabia begins cutting its production.

#1 Williams Companies Inc (NYSE:WMB)

Number of Hedge Fund Holders (as of September 30): 73
Total Value of Hedge Fund Holdings (as of September 30): $6.05 billion
Hedge Fund Holdings as Percent of Float (as of September 30): 21.90%

Many hedge funds are bullish on Williams Companies because the company is a great play on increasing natural gas production in the United States. If natural gas production rises, more volume will flow though Williams Companies’ pipes and the company will make more in profits. Williams Companies’ financials are also holding up well in light of the industry volatility. Because of new pipelines and processing plants coming online, Williams Companies’ primary cash cow, Williams Partners L.P. (NYSE:WPZ), enjoyed an adjusted EBITDA increase of 21% year-over-year to $1.1 billion in the third quarter. Distributable cash flow more than doubled to $754 million for the quarter, up from $367 million in the third quarter of 2014. Because of the increase in cash flow, the company has a cash distribution coverage ratio of 1.04x, more than enough to cover the dividend payout. In late September, Energy Transfer Equity LP (NYSE:ETE) offered to acquire Williams Companies Inc (NYSE:WMB) in a deal that should yield $2 billion in annual EBITDA synergies by 2020. Under the terms of the merger, Williams Companies Inc (NYSE:WMB) shareholders are entitled to 1.8716 Energy Transfer Equity LP (NYSE:ETE) shares for each share of Williams that they own. Williams Companies shareholders can also elect to get cash, but on a prorated basis of $6.05 billion.

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