In this article, we discuss 10 energy stocks to buy according to Blackstone Group.
Blackstone Group is a leading New York-based alternative investment management company that controls 13F securities worth roughly $40 billion as per the regulatory filings from the fourth quarter of 2021. With the top ten holdings comprising 56.88% of the total 13F securities, Blackstone Group’s main interests lie in the energy sector, with 53.12% of the investments consisting of energy stocks. It also invests in the real estate, utilities and telecommunications, healthcare, finance, industrials, and information technology sectors.
Blackstone Group was initially formed as a mergers and acquisitions firm by Peter G. Peterson and Stephen A. Schwarzman in 1985. One of Blackstone’s most significant projects was assisting in the merger of investment banks E. F. Hutton & Co. and Lehman Brothers in 1987. The company is known for undertaking significant leveraged buyouts. Blackstone acquired Hilton Worldwide for approximately $26 billion in July 2007, representing a 25% premium to Hilton’s record high stock price. Blackstone held a leading position in Hilton until the company became publicly listed again in December 2013.
Blackstone Group is involved in three main lines of operations, including corporate private equity, real estate, and marketable alternative asset management. In Q4 2021, the company’s top buys included Cheniere Energy Partners, L.P. (NYSE:CQP), FirstEnergy Corp. (NYSE:FE), and Rivian Automotive, Inc. (NASDAQ:RIVN). Whereas, Blackstone reduced stakes in TaskUs, Inc. (NASDAQ:TASK), Bumble Inc. (NASDAQ:BMBL), and First Industrial Realty Trust, Inc. (NYSE:FR).
The most notable energy stocks held by Blackstone Group in Q4 2021 include Chesapeake Energy Corporation (NASDAQ:CHK), Cheniere Energy, Inc. (NYSE:LNG), and Diamondback Energy, Inc. (NASDAQ:FANG), among others discussed in detail below.
Our Methodology
We used the Q4 portfolio of Blackstone Group to select its top ten energy stock picks. The companies were ranked according to Blackstone Group’s stake value in each holding. We have mentioned the hedge fund sentiment around the stocks, in addition to available analyst ratings and latest earnings.
Energy Stocks to Buy According to Blackstone Group
10. Targa Resources Corp. (NYSE:TRGP)
Number of Hedge Fund Holders: 35
Percentage of Blackstone Group’s Portfolio: 1.43%
Targa Resources Corp. (NYSE:TRGP) is a midstream energy company that is headquartered in Houston, Texas. The company delivers natural gas and natural gas liquids to customers across the United States. Blackstone Group owns approximately 11 million Targa Resources Corp. (NYSE:TRGP) shares as of Q4 2021, worth $572.8 million, representing 1.43% of the total 13F securities.
On January 20, Targa Resources Corp. (NYSE:TRGP) declared a $0.35 per share quarterly dividend, a 250% increase from its prior dividend of $0.10. The dividend was paid on February 15.
In a press release on February 24, Targa Resources Corp. (NYSE:TRGP) posted a Q4 net loss of $335.4 million. The company also reported a revenue of $5.44 billion, up 111.7% year-on-year, outperforming market consensus by $580 million.
Barclays analyst Theresa Chen on January 20 raised the price target on Targa Resources Corp. (NYSE:TRGP) to $72 from $66 and kept an Overweight rating on the shares. The analyst expects “more variability” across refining results in Q4, reflective of execution during the quarter, but she has a “generally positive outlook for the group in 2022.”
Among the hedge funds tracked by Insider Monkey in Q4 2021, 35 funds were bullish on Targa Resources Corp. (NYSE:TRGP), up from 26 funds in the prior quarter. Zimmer Partners is the largest stakeholder of Targa Resources Corp. (NYSE:TRGP), with 3.8 million shares worth $202.3 million.
In addition to Chesapeake Energy Corporation (NASDAQ:CHK), Cheniere Energy, Inc. (NYSE:LNG), and Diamondback Energy, Inc. (NASDAQ:FANG), Targa Resources Corp. (NYSE:TRGP) is a notable energy stock in Blackstone Group’s Q4 portfolio.
9. PG&E Corporation (NYSE:PCG)
Number of Hedge Fund Holders: 59
Percentage of Blackstone Group’s Portfolio: 1.44%
PG&E Corporation (NYSE:PCG) operates via its subsidiary, Pacific Gas and Electric Company, supplying electricity and natural gas to customers in northern and central California. Blackstone Group held 47.5 million PG&E Corporation (NYSE:PCG) shares during the fourth quarter of 2021, worth $577.60 million, accounting for 1.44% of the fund’s total investments for the period.
On February 10, PG&E Corporation (NYSE:PCG) reported its fourth quarter earnings, posting an EPS of $0.28, in line with analysts’ consensus estimates. The $5.25 billion revenue jumped 10.49% from the prior-year quarter, missing market consensus by $74.38 million. PG&E Corporation (NYSE:PCG) issued in-line guidance for FY 2022, seeing adjusted EPS of $1.07-$1.13, compared with a $1.12 consensus estimate.
Mizuho analyst Paul Fremont on January 31 raised the price target on PG&E Corporation (NYSE:PCG) to $17.50 from $16 and kept a Buy rating on the shares.
According to the Q4 database of Insider Monkey, 59 hedge funds held long positions in PG&E Corporation (NYSE:PCG), up from 54 funds in the quarter earlier. Dan Loeb’s Third Point held the biggest stake in PG&E Corporation (NYSE:PCG), with 77 million shares worth $934.78 million.
Here is what GoodHaven Capital Management has to say about PG&E Corporation (NYSE:PCG) in their Q4 2020 investor letter:
“During the period we purchased a new holding – PG&E Corporation – the California based utility (PCG). We expect that contrarian special situations will continue to (opportunistically) be an important part of the portfolio. After all, we bought PCG – which has filed Ch. 11 twice related to prior exposure to wildfire liabilities and staggering mismanagement – right in the middle of California’s recent heavy wildfire season. Our thinking here is that the reorganized utility has new regulatory protections that significantly reduces wildfire liability exposure, an above average rate growth profile and potentially much better management – they were searching for a new CEO when we made our investment. We purchased the stock at a high single digit forward earnings multiple, a discount to its peers that trade in the mid to high teens. Shortly after our purchases PG&E hired the well regarded Patti Poppe as their new CEO – we like this decision.”
8. Chesapeake Energy Corporation (NASDAQ:CHK)
Number of Hedge Fund Holders: 50
Percentage of Blackstone Group’s Portfolio: 2.10%
Chesapeake Energy Corporation (NASDAQ:CHK) is an Oklahoma-based company that develops properties for the production of oil, natural gas, and natural gas liquids across the United States. Chesapeake Energy Corporation (NASDAQ:CHK) stock represents 2.10% of Blackstone Group’s Q4 portfolio, with the fund holding more than 13 million shares worth roughly $840 million.
Publishing its Q4 results on February 23, Chesapeake Energy Corporation (NASDAQ:CHK) reported earnings per share of $2.39, missing market consensus estimates by $0.09. Revenue for the period jumped 134.38% year-on-year to $1.79 billion, outperforming analysts’ predictions by $705.52 million.
On February 11, JPMorgan analyst Zach Parham initiated coverage of Chesapeake Energy Corporation (NASDAQ:CHK) with an Overweight rating and a $85 price target. The company emerged from Chapter 11 restructuring in February 2021 with a much improved balance sheet, a lower cost structure given renegotiated midstream costs, and a revamped board focused on the key metric of the “Shale 3.0 era”, which is generating free cash flow and returning that cash to shareholders, the analyst told investors in a bullish note.
Oaktree Capital Management held the biggest stake in Chesapeake Energy Corporation (NASDAQ:CHK) in Q4 2021, with 12 million shares worth $774.3 million. Overall, 50 hedge funds were bullish on the stock at the end of December 2021.
7. Diamondback Energy, Inc. (NASDAQ:FANG)
Number of Hedge Fund Holders: 45
Percentage of Blackstone Group’s Portfolio: 2.86%
Blackstone Group owns over 10.5 million shares of Diamondback Energy, Inc. (NASDAQ:FANG) as of Q4 2021, worth $1.14 billion, representing 2.86% of the 13F securities. Diamondback Energy, Inc. (NASDAQ:FANG) is a Texas-based company that develops and explores onshore oil and natural gas reserves in the Permian Basin in West Texas.
Diamondback Energy, Inc. (NASDAQ:FANG) on February 22 declared a $0.60 per share quarterly dividend, a 20% increase from its prior dividend of $0.50. The dividend will be paid on March 11, to shareholders of record on March 4.
According to the Q4 database of Insider Monkey, 45 hedge funds were bullish on Diamondback Energy, Inc. (NASDAQ:FANG), down from 51 funds in the prior quarter. Harris Associates is the biggest Diamondback Energy, Inc. (NASDAQ:FANG) shareholder, with a $328 million position in the company.
On February 23, TD Securities analyst Menno Hulshof raised the price target on Diamondback Energy, Inc. (NASDAQ:FANG) to $150 from $140 and kept a Buy rating on the shares following the “solid beat” in Q4. The analyst considers current share levels an attractive entry point for a “Permian pure-play with a peer-leading cost structure, and a strong commitment to returning at least” 50% of free cash flow.
Here is what Miller Opportunity Equity has to say about Diamondback Energy, Inc. (NASDAQ:FANG) in its Q4 2021 investor letter:
“Diamondback Energy (FANG) returned 14.4% in the quarter as oil price rose and fell during the quarter ending the period largely in the same place that it started. The company reported strong 3Q results beating on the top and bottom line. The company reported revenue of $1.9B beating consensus of $1.5B with EPS of $2.94 beating expectations for $2.79. The beat was driven by a combination of higher volumes, higher realizations, and efficiency gains. The company increased its total production guidance for the year to 370-372mboe/d1 (up from 363-370mboe/d) while lowering Capital Expenditure (CAPEX) guidance for the second time this year to $1.49-1.53B. The company raised the dividend for the third time this year to $2/share annually while authorizing a new $2B share repurchase program. Starting in 4Q21, the company plans to return 50% of Free Cash Flow to shareholders through the base dividend and a combination of buybacks and special dividends. Finally, the CEO Travis Stice announced plans to reduce methane emissions by 70% as part of the firm’s ESG initiative.”
6. FirstEnergy Corp. (NYSE:FE)
Number of Hedge Fund Holders: 40
Percentage of Blackstone Group’s Portfolio: 3.0%
FirstEnergy Corp. (NYSE:FE) is an Ohio-based company that operates coal, nuclear, hydroelectric, natural gas, wind, and solar power generating facilities. Blackstone Group owns a $1.19 billion stake in FirstEnergy Corp. (NYSE:FE), representing 3% of the total 13F securities.
On December 21, FirstEnergy Corp. (NYSE:FE) declared a $0.39 per share quarterly dividend, in line with previous. The dividend will be paid on March 1, to shareholders of record on February 7.
Michael Lonegan, an analyst from Evercore ISI, upgraded FirstEnergy Corp. (NYSE:FE) on January 7 to Outperform from In Line with a price target of $46, up from $40. According to the analyst, FirstEnergy Corp. (NYSE:FE) shares present an “inexpensive opportunity” that has not yet completely realized the benefits of transitioning to a fully regulated electric utility.
In Q4 2021, 40 hedge funds in the database of Insider Monkey reported owning stakes in FirstEnergy Corp. (NYSE:FE), valued at $1.75 billion. Icahn Capital LP is the biggest shareholder of the company, with roughly 19 million shares worth $788.8 million.
FirstEnergy Corp. (NYSE:FE) is a popular energy stock among elite hedge funds, just like Chesapeake Energy Corporation (NASDAQ:CHK), Cheniere Energy, Inc. (NYSE:LNG), and Diamondback Energy, Inc. (NASDAQ:FANG).
5. Cheniere Energy, Inc. (NYSE:LNG)
Number of Hedge Fund Holders: 52
Percentage of Blackstone Group’s Portfolio: 3.01%
Cheniere Energy, Inc. (NYSE:LNG) stock represents 3.01% of Blackstone Group’s Q4 portfolio, and the institutional investor owns 11.85 million shares of the company, worth $1.20 billion. Cheniere Energy, Inc. (NYSE:LNG) is an energy infrastructure company that operates natural gas and liquefied natural gas businesses in the United States.
On January 25, Cheniere Energy, Inc. (NYSE:LNG) declared a quarterly dividend of $0.33 per share, in line with previous. The dividend is payable on February 28, to shareholders of record on February 7.
Cheniere Energy, Inc. (NYSE:LNG) reported its Q4 results on February 24, announcing a loss per share of $2.65, missing consensus estimates by $4.43. Revenue over the period jumped 135.27% year-on-year to $6.56 billion, surpassing market predictions by $2.07 billion.
Mizuho analyst Robert Mosca on February 25 raised the price target on Cheniere Energy, Inc. (NYSE:LNG) to $145 from $128 and kept a Buy rating on the shares. The analyst sees “potentially even more upside” for Cheniere Energy, Inc. (NYSE:LNG) with Russia invading Ukraine. He also expects Cheniere Energy, Inc. (NYSE:LNG) to deliver on its capital allocation objectives much faster than anticipated.
Among the hedge funds tracked by Insider Monkey, 52 funds were bullish on Cheniere Energy, Inc. (NYSE:LNG), up from 49 funds in the prior quarter. Icahn Capital LP is the largest stakeholder of Cheniere Energy, Inc. (NYSE:LNG), owning more than 16 million shares worth $1.6 billion.
Here is what ClearBridge Global Infrastructure Value Strategy has to say about Cheniere Energy, Inc. (NYSE:LNG) in its Q3 2021 investor letter:
“Cheniere Energy is an energy infrastructure company that owns and operates U.S. liquefied natural gas (LNG) export facilities. Strong quarterly results and the disclosure of capital allocation policies were positively received by the markets. In addition, continued supply and demand tightness in the LNG market created a favorable commodity price environment.”
4. Enterprise Products Partners L.P. (NYSE:EPD)
Number of Hedge Fund Holders: 21
Percentage of Blackstone Group’s Portfolio: 3.47%
Enterprise Products Partners L.P. (NYSE:EPD) is a midstream energy services company that supplies natural gas, natural gas liquids, crude oil, petrochemicals, and refined products. Blackstone Group owns a $1.3 billion position in Enterprise Products Partners L.P. (NYSE:EPD) as of Q4 2021, which accounts for 3.47% of the fund’s total 13F investments. Citi analyst Timm Schneider downgraded Enterprise Products Partners L.P. (NYSE:EPD) on February 1 to Neutral from Buy with an unchanged price target of $25.
On February 1, Enterprise Products Partners L.P. (NYSE:EPD) posted its Q4 results, announcing earnings per share of $0.52, missing estimates by $0.02. The company’s revenue for the period came in at $11.37 billion, up 61.41% year-over-year, above market consensus by $1.70 billion.
Enterprise Products Partners L.P. (NYSE:EPD) acquired Navitas Midstream Partners from Warburg Pincus for $3.25 billion in cash on January 10, which will provide its natural gas processing and natural gas liquids business with an entry point into the Midland Basin.
Enterprise Products Partners L.P. (NYSE:EPD) on January 6 declared a $0.465 per share quarterly dividend, a 3.3% increase from its prior dividend of $0.450, paid on February 11. Additionally, during the fourth quarter of 2021, Enterprise Products Partners L.P. (NYSE:EPD) purchased $125 million of its common units in the open market, bringing the total amount of common unit buybacks during 2021 to $200 million.
First Eagle Investment Management held the leading stake in Enterprise Products Partners L.P. (NYSE:EPD) as of Q4 2021, with 3.14 million shares worth $69 million. Overall, 21 hedge funds were bullish on Enterprise Products Partners L.P. (NYSE:EPD), with collective stakes amounting to $181 million.
Here is what ClearBridge Investments has to say about Enterprise Products Partners L.P. (NYSE:EPD) in its Q1 2021 investor letter:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names (including) Enterprise Products Partners LP. We are positive on this company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
3. Energy Transfer LP (NYSE:ET)
Number of Hedge Fund Holders: 36
Percentage of Blackstone Group’s Portfolio: 3.53%
Energy Transfer LP (NYSE:ET) owns and operates natural gas transportation pipelines and natural gas storage facilities across the United States. As of Q4 2021, Blackstone Group held 171.5 million Energy Transfer LP (NYSE:ET) shares, worth $1.4 billion, representing 3.53% of the fund’s total 13F securities.
Energy Transfer LP (NYSE:ET) announced on February 16 its Q4 earnings, posting an EPS of $0.30, exceeding consensus estimates by $0.08. The company’s revenue came in at $18.66 billion, up roughly 86% from the prior-year quarter, surpassing estimates by $2.04 billion.
On January 25, Energy Transfer LP (NYSE:ET) declared a $0.175 per share quarterly dividend, a 14.8% increase from its prior dividend of $0.1525. Offering a forward yield of 7.53%, the dividend was paid on February 18.
Mizuho analyst Gabriel Moreen on February 18 raised the price target on Energy Transfer LP (NYSE:ET) to $14 from $13 and kept a Buy rating on the shares. More important than issuing “strong” 2022 EBITDA guidance, the company delivered positive commercial updates in several key areas emphasizing its growth potential in the current environment, the analyst told investors in a bullish thesis.
Abrams Capital Management is the largest stakeholder of Energy Transfer LP (NYSE:ET) as of December 2021, with 22.1 million shares worth $182 million. Overall, 36 hedge funds were bullish on the stock in the fourth quarter of 2021.
Here is what Miller Value Partners has to say about Energy Transfer LP (NYSE:ET) in its Q2 2021 investor letter:
“Energy Transfer LP (ET)rose over the period along with the price of oil climbing 40.59% over the period. The company received positive news that the Dakota Access Pipeline project would not be shut down while the Environmental Impact Statement by the US Army Corps of Engineers is drawn up. Energy Transfer reported strong 1Q results with revenue of $17B surpassing expectations for $11.8B with adjusted earnings before income, taxes, depreciation and amortization (EBITDA) hitting $5.04B ahead of consensus of $2.77B. The company raised full year adjusted EBITDA guidance to $12.9-13.3B from $10.6-11.0B previously, with the increase largely related to the benefits realized from Winter Storm Uri. The company paid down $3.7B in debt during the quarter, using strong cash flow to reduce leverage. The company also announced the issuance of $900M in 6.5% Series H perpetual preferreds with the company using the proceeds to repay debt and for general purposes.”
2. MPLX LP (NYSE:MPLX)
Number of Hedge Fund Holders: 8
Percentage of Blackstone Group’s Portfolio: 4.90%
MPLX LP (NYSE:MPLX) is a subsidiary of Marathon Petroleum Corporation, owning midstream energy infrastructure and logistics assets in the United States. Blackstone Group owns more than 66 million shares of MPLX LP (NYSE:MPLX) as of Q4 2021, worth $1.95 billion, representing 4.90% of the fund’s 13F portfolio.
With a forward yield of 8.88%, MPLX LP (NYSE:MPLX) declared on January 25 a $0.705 per share quarterly dividend, in line with previous. The dividend was paid on February 14, to shareholders of record on February 4.
MPLX LP (NYSE:MPLX) posted its fourth quarter results on February 2, announcing earnings per share of $0.78, topping estimates by $0.04. Revenue over the period jumped 21.57% year-on-year to $2.73 billion, surpassing estimates by $283.32 million.
On January 20, Barclays analyst Theresa Chen raised the price target on MPLX LP (NYSE:MPLX) to $35 from $34 and kept an Overweight rating on the shares. She expects “more variability” across refining results in Q4, but has a “generally positive outlook for the group in 2022”.
Chiron Investment Management is a significant shareholder of the company, with 539,782 shares worth roughly $16 million. Overall, 8 hedge funds in the Q4 database of Insider Monkey were bullish on MPLX LP (NYSE:MPLX), with combined stakes equaling $50.3 million.
Here is what Miller/Howard Investments has to say about MPLX LP (NYSE:MPLX) in its Q1 2021 investor letter:
“Lastly, we added MPLX LP (MPLX) in the with-MLP version. MLPX pays a high dividend and is cheap relative to similar pipeline companies… We increased our weight in MPLX LP (MPLX) which provides exposure to Permian volumes and northeast natural gas volumes. In addition, the company’s FCF yield was above the portfolio’s FCF yield.”
1. Cheniere Energy Partners, L.P. (NYSE:CQP)
Number of Hedge Fund Holders: 3
Percentage of Blackstone Group’s Portfolio: 21.56%
Cheniere Energy Partners, L.P. (NYSE:CQP) is the largest holding in Blackstone Group’s Q4 portfolio, with the investment manager owning 203.78 million shares of the company, worth $8.60 billion, representing 21.56% of the fund’s 13F securities. Cheniere Energy Partners, L.P. (NYSE:CQP) is a liquefied natural gas company headquartered in Houston, Texas.
On February 24, Cheniere Energy Partners, L.P. (NYSE:CQP) reported a Q4 GAAP EPS of $0.93, exceeding consensus estimates by $0.17. The company announced a revenue of $3.26 billion, up 63.8% year-over-year, surpassing by $710 million.
UBS analyst Brian Reynolds on February 1 downgraded Cheniere Energy Partners, L.P. (NYSE:CQP) to Neutral from Buy with a $50 price target. Following the stock’s 21% rally over the past six weeks, its risk-reward is now balanced, the analyst told investors in a research note.
According to the Q4 database of Insider Monkey, 3 hedge funds were bullish on Cheniere Energy Partners, L.P. (NYSE:CQP), with total stakes amounting to $5.9 million. Citadel Investment Group was the biggest stakeholder of the company, with 115,491 shares worth $4.8 million.
You can also take a look at 10 Tech Stocks to Buy According to Nathan Przybylo’s L2 Asset Management and 10 Dividend Stocks to Buy According to Christian Leone’s Luxor Capital.
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Disclosure: None. 10 Energy Stocks to Buy According to Blackstone Group is originally published on Insider Monkey.
