2. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 53
In January, Chevron Corporation (NYSE:CVX), one of the world’s largest integrated energy companies, reported its fourth consecutive quarterly profit as oil and natural gas prices recovered from their pandemic slump. The California-based oil and gas company delivered net income of $5.1 billion or diluted EPS of $2.63. As one of the biggest gas suppliers in the world, Chevron Corporation (NYSE:CVX) increased its global net natural gas production in 2021 to 7,709 MMcf/d from 7,290 MMcf/d in 2020.
Chevron Corporation (NYSE:CVX) generated $21.1 billion in free cash flow last year, up from $1.1 billion the year before, allowing the oil and gas giant to return $11.6 billion to shareholders in the form of dividends and share repurchases. Chevron Corporation (NYSE:CVX) is one of the most well-known dividend aristocrats, having increased its dividend payout for the past 35 years. Currently, the oil company pays its shareholders an annual dividend of $5.68 per share.
At the end of the fourth quarter of 2021, 53 funds held a total stake of $6.51 billion in Chevron Corporation (NYSE:CVX), up from 51 funds a quarter earlier.
Here is what Goehring & Rozencwajg Associates had to say about Chevron Corporation in its Q3 2021 investor letter:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publically expressed concerns about both projects. According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
