In this article, we discuss 8 best energy stocks to buy according to Stuart Zimmer’s hedge fund.
Stuart Zimmer started his career as a research analyst at Steinhardt Partners in 1991, focusing on energy assets such as electric and gas utilities. He left Steinhardt Partners in 1993 to join Commodities Corp.’s utility hedge fund, where he was in charge of performing basic research on electric and gas utilities. Later, he served as the portfolio manager of the ZP Utility Fund, L.P. and ZP Offshore Utility Fund, Ltd. since its establishment in 1997. Stuart Zimmer is the founder and chief executive officer of Zimmer Partners, a hedge fund with $8.95 billion in assets under management, and his three-decade career has concentrated chiefly on energy and utility firms. He established the hedge fund in 2012.
Zimmer Partners is a New York-based hedge fund. The firm handles long/short equity strategies that seek to deliver absolute returns in all market conditions with minimal correlation to energy-related and broader market indices. At the end of the fourth quarter of 2021, Zimmer Partners’ portfolio had 116 long positions and a value of $6.70 billion, with a 34.7% concentration of the top 10 holdings. The hedge fund bought 49 stocks during the fourth quarter, raised its stake in 27 others, sold 74, and reduced its holdings in 37 securities.
In this article, we are going to focus on the energy stocks in the portfolio of Stuart Zimmer’s hedge fund.
As of the fourth quarter of 2021, Zimmer Partners has stakes in several prominent energy companies like Cheniere Energy, Inc. (NYSE:LNG), Energy Transfer LP (NYSE:ET), and Targa Resources Corp. (NYSE:TRGP).
Cheniere Energy, Inc. (NYSE:LNG), in which Zimmer Partners has a $15.21 million stake, is gaining a lot of attention as Cheniere Energy, Inc. (NYSE:LNG) shares have returned almost 100% to investors over the past 12 months as of April 5.
Stuart Zimmer of Zimmer Partners
Energy Transfer LP (NYSE:ET) is also part of Stuart Zimmer’s portfolio. On February 16, Energy Transfer LP (NYSE:ET) reported earnings for the fourth quarter, posting earnings per share of $0.29, in line with the estimates.
Another notable stock in Zimmer Partners’ portfolio is Targa Resources Corp. (NYSE:TRGP). The investor owns a $202.37 million stake in the company. Targa Resources (NYSE:TRGP) agreed to pay $200 million for bolt-on assets from the natural gas pipeline transportation company, Southcross Energy Operating, and its subsidiaries in south Texas.
Our Methodology
We used the fourth quarter portfolio of Stuart Zimmer’s Zimmer Partners for this analysis, selecting the fund’s 8 best energy stocks picks. The hedge fund’s stake value in each investment was used to rank the list. The number of hedge funds with stakes in each company was calculated using data from Insider Monkey’s database of 900+ elite hedge funds at the end of Q4 2021.
Best Energy Stocks to Buy According to Stuart Zimmer’s Hedge Fund
8. Plains All American Pipeline, L.P. (NASDAQ:PAA)
Zimmer Partners’ Stake Value: $9,984,000
Percentage of Zimmer Partners’ 13F Portfolio: 0.14%
Number of Hedge Fund Holders: 6
Plains All American Pipeline, L.P. (NASDAQ:PAA) is a logistics company that owns and operates midstream energy infrastructure. Arrowstreet Capital is Plains All American Pipeline, L.P. (NASDAQ:PAA)’s largest shareholder, with shares worth $19.77 million.
On January 25, Bernstein analyst Jean Ann Salisbury raised Plains All American Pipeline, L.P. (NASDAQ:PAA) to Outperform from Market Perform, with a $14.50 price target representing a 33% gain.
Hedge fund sentiment has lately dropped for Plains All American Pipeline, L.P. (NASDAQ:PAA). Long hedge fund positions fell to 6 at the end of the fourth quarter, down from 7 at the end of the preceding quarter.
The hedge fund chaired by Stuart Zimmer holds close to 1.07 million shares of the Plains All American Pipeline, L.P. (NASDAQ:PAA), worth over $9.98 million. Zimmer Partners’ stake in Plains All American Pipeline, L.P. (NASDAQ:PAA) was reduced by 22% in the fourth quarter of 2021.
In addition to Cheniere Energy, Inc. (NYSE:LNG), Energy Transfer LP (NYSE:ET), and Targa Resources Corp. (NYSE:TRGP), Plains All American Pipeline, L.P. (NASDAQ:PAA) is a notable energy stock in Zimmer Partners’ Q4 portfolio.
7. NuStar Energy L.P. (NYSE:NS)
Zimmer Partners’ Stake Value: $10,449,000
Percentage of Zimmer Partners’ 13F Portfolio: 0.15%
Number of Hedge Fund Holders: 3
NuStar Energy L.P. (NYSE:NS) is in the business of transporting petroleum products and anhydrous ammonia, as well as terminating, storing, and marketing them. Stuart J. Zimmer’s Zimmer Partners held 657,966 shares of NuStar Energy L.P. (NYSE:NS) in the fourth quarter of 2021, worth $10.45 million and accounting for 0.15% of the fund’s total portfolio value.
Wells Fargo analyst Michael Blum reduced NuStar Energy L.P. (NYSE:NS) from Overweight to Equal Weight with a $17 price target on February 7. According to the analyst, NuStar’s capital allocation emphasis would be to reduce leverage over the next few years. As a result, he believed NuStar might lag behind peers with better balance sheets and free cash flow generation in terms of capital return.
According to the Q4 database of Insider Monkey, 3 hedge funds held stakes in NuStar Energy L.P. (NYSE:NS), compared to 5 funds in the earlier quarter. The total stakes owned in Q4 amounted to $11.70 million.
6. Cheniere Energy, Inc. (NYSE:LNG)
Zimmer Partners’ Stake Value: $15,213,000
Percentage of Zimmer Partners’ 13F Portfolio: 0.22%
Number of Hedge Fund Holders: 52
Cheniere Energy, Inc. (NYSE:LNG) is a company that deals with liquefied natural gas (LNG). It owns and operates LNG terminals in Corpus Christi and at the Sabine Pass LNG plant. Overall, 52 hedge funds held long positions in Cheniere Energy, Inc. (NYSE:LNG) at the end of the fourth quarter of 2021, up from 49 funds in the last quarter.
Zimmer Partners made its first investment in the firm during the second quarter of 2015. In the fourth quarter of 2021, the hedge fund cut its stake in Cheniere Energy, Inc. (NYSE:LNG) by more than 267,911 shares, reducing its total position by 65%. However, Zimmer Partners still holds 150,000 shares of Cheniere Energy, Inc. (NYSE:LNG), worth more than $15.21 million.
RBC Capital analyst Elvira Scotto maintained an Outperform rating on Cheniere Energy, Inc. (NYSE:LNG) and boosted her price target to $151 from $116 on March 8. The analyst predicted that the firm would approve Corpus Christi Stage 3 and given the increased demand for liquefied natural gas, Cheniere would be able to expand beyond that stage. Cheniere Energy, Inc. (NYSE:LNG) announced on March 7 that Cheniere Corpus Christi Liquefaction Stage III, LLC, a subsidiary of Cheniere Energy, Inc., has signed a lump sum comprehensive engineering, manufacturing, and construction contract with Bechtel for the Corpus Christi Stage III Project.
In its third-quarter 2021 investor letter, ClearBridge Investments mentioned Cheniere Energy, Inc. (NYSE:LNG). Here are the contents of the 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.”
5. Western Midstream Partners, LP (NYSE:WES)
Zimmer Partners’ Stake Value: $17,729,000
Percentage of Zimmer Partners’ 13F Portfolio: 0.26%
Number of Hedge Fund Holders: 10
Western Midstream Partners, LP (NYSE:WES) is a midstream energy asset owner, operator, acquirer, and developer. Following the Q4 results, Mizuho analyst Gabriel Moreen boosted his price objective on Western Midstream Partners, LP (NYSE:WES) to $31 from $28 and kept a Buy rating on the stock.
In the fourth quarter of 2021, 10 hedge funds reported owning stakes in Western Midstream Partners, LP (NYSE:WES) worth $106.77 million, compared to the same number of funds holding stakes in Western Midstream Partners, LP (NYSE:WES) worth $141.26 million in the previous quarter.
According to the fourth quarter 13F Filings, Stuart J. Zimmer’s Zimmer Partners held over 796,080 shares of Western Midstream Partners, LP (NYSE:WES), amounting to more than $17.73 million, accounting for 0.26% of the fund’s investment portfolio. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the biggest stakeholder of Western Midstream Partners, LP (NYSE:WES) as of the fourth quarter of 2021, reducing its stake in the company by 4%, holding 2.07 million shares worth almost $46.08 million.
Western Midstream Partners, LP (NYSE:WES), like Cheniere Energy, Inc. (NYSE:LNG), Energy Transfer LP (NYSE:ET), and Targa Resources Corp. (NYSE:TRGP), is attracting investors’ interest in 2022.
Miller/Howard Investments, an investment management firm in its Q1 2021 investor letter, mentioned Western Midstream Partners, LP (NYSE:WES). Here is what the fund said:
“We increased our weight in Western Midstream Partners (WES) again this quarter, as it should benefit from higher oil prices that might lead to more drilling activity in the Permian and DJ basins.”
4. Energy Transfer LP (NYSE:ET)
Zimmer Partners’ Stake Value: $18,362,000
Percentage of Zimmer Partners’ 13F Portfolio: 0.27%
Number of Hedge Fund Holders: 36
Energy Transfer LP (NYSE:ET) is a natural gas and propane pipeline delivery firm. Energy Transfer LP (NYSE:ET)’s price target was lifted to $14 from $13 on February 18 by Mizuho analyst Gabriel Moreen, who reiterated a Buy rating on the stock.
Energy Transfer LP (NYSE:ET) is favoured by elite hedge funds. According to the fourth quarter database of Insider Monkey, 36 hedge funds were bullish on Energy Transfer LP (NYSE:ET), up from 29 funds in the prior quarter.
At the end of the fourth quarter of 2021, Zimmer Partners held 2.23 million shares of Energy Transfer LP (NYSE:ET), amounting to $18.36 million and representing 0.27% of the fund’s total investments. Out of the hedge funds being tracked by Insider Monkey, Boston-based investment firm Abrams Capital Management is a leading shareholder of Energy Transfer LP (NYSE:ET), with 22.12 million shares worth more than $182.08 million.
Miller Value Partners, in its Q2 2021 investor letter, talked about Energy Transfer L.P. (NYSE:ET). Here is what the fund said:
“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.”
3. Southwestern Energy Company (NYSE:SWN)
Zimmer Partners’ Stake Value: $41,078,000
Percentage of Zimmer Partners’ 13F Portfolio: 0.61%
Number of Hedge Fund Holders: 24
Southwestern Energy Company (NYSE:SWN) operates as a natural gas, oil, and natural gas liquids exploration, development, and production company. Among the hedge funds tracked by Insider Monkey, 24 funds were bullish on Southwestern Energy Company (NYSE:SWN) at the end of the fourth quarter of 2021, compared to 22 funds in the prior quarter.
David Iben’s Kopernik Global Investors is Southwestern Energy Company (NYSE:SWN)’s most significant stakeholder, with 19.20 million shares worth $89.45 million. Southwestern Energy Company (NYSE:SWN) was given a Buy rating and a $9 price objective by Seaport Global analyst Nick Pope on March 30. Pope told investors that Southwestern Energy Company (NYSE:SWN)’s recent deals enabled the company to produce considerable cash and provide multiple outlets to compensate stakeholders.
Southwestern Energy Company (NYSE:SWN) was Zimmer Partners’ new acquisition in Q4 2021. The hedge fund purchased shares worth over $41.08 million in Southwestern Energy Company (NYSE:SWN), representing 0.61% of its 13F portfolio.
2. DT Midstream, Inc. (NYSE:DTM)
Zimmer Partners’ Stake Value: $191,998,000
Percentage of Zimmer Partners’ 13F Portfolio: 2.86%
Number of Hedge Fund Holders: 17
DT Midstream, Inc. (NYSE:DTM) is the investor, operator, and manager of a natural gas midstream asset portfolio. Pipeline and Gathering are the two segments in which the company works. According to Insider Monkey’s fourth quarter database, 17 hedge funds were bullish on DT Midstream, Inc. (NYSE:DTM), compared to 22 funds in the previous quarter.
Zimmer Partners is the leading shareholder of DT Midstream, Inc. (NYSE:DTM), owning 4 million shares of the company, worth over $192 million. Next on the list is Sessa Capital, which holds 2.89 million shares of DT Midstream, Inc. (NYSE:DTM), valued at more than $138.86 million.
Spiro Dounis, a Credit Suisse analyst, lowered DT Midstream, Inc. (NYSE:DTM) from Outperform to Neutral with a price target of $58, up from $55. The analyst highlighted valuation as the reason for the downgrade, followed by DT Midstream, Inc. (NYSE:DTM)’s recent outperformance.
1. Targa Resources Corp. (NYSE:TRGP)
Zimmer Partners’ Stake Value: $202,373,000
Percentage of Zimmer Partners’ 13F Portfolio: 3.02%
Number of Hedge Fund Holders: 35
Targa Resources Corp. (NYSE:TRGP) owns and manages a portfolio of midstream energy assets in North America via its subsidiary, Targa Resources Partners LP. Since the second quarter of 2014, Targa Resources Corp. (NYSE:TRGP) has been a part of Zimmer Partners’ portfolio. On the other hand, Stuart Zimmer disclosed a decreased stake in Targa Resources Corp. (NYSE:TRGP) by 1% in its Q4 2021 filings. This leaves the hedge fund with a position worth $202.37 million.
Targa Resources Corp. (NYSE:TRGP) was raised to Buy from Neutral by Mizuho analyst Gabriel Moreen on March 18, with a price objective of $85, up from $58. According to Moreen, the sale of Targa Resources Corp. (NYSE:TRGP)’s GCX natural gas pipeline component simplified its financing structure and gave it even more near-term mobility.
According to Insider Monkey’s hedge fund database, 35 funds held stakes worth $626.32 million in Targa Resources Corp. (NYSE:TRGP) in the fourth quarter of 2021, up from 26 in the preceding quarter worth $567.25 million.
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Disclosure: None. 8 Best Energy Stocks to Buy According to Stuart Zimmer’s Hedge Fund is originally published on Insider Monkey.
