5 Cheap Penny Stocks to Buy According to Hedge Funds

2. Southwestern Energy Company (NYSE:SWN)

Number of Hedge Fund Holders: 44

P/E Ratio as of March 29: 2.96

Southwestern Energy Company (NYSE:SWN) is an independent energy company that engages in the exploration, development, and production of natural gas, oil, and natural gas liquids in the United States. Southwestern Energy Company (NYSE:SWN)’s capital investments in the fourth quarter of 2022 were $537 million, bringing full year capital investment to $2,209 million. The company sold 133 wells, drilled 138 wells, and completed 139 wells during the year.

Morgan Stanley analyst Devin McDermott revised the firm’s commodity assumptions for Southwestern Energy Company (NYSE:SWN) based on Q1 actuals and Q2 strip. As a result, McDermott lowered the firm’s price target on Southwestern Energy Company (NYSE:SWN) from $6 to $5 on March 27, while maintaining an Equal Weight rating on the shares. Across Morgan Stanley’s coverage, the analyst has observed a 1% decrease in WTI oil prices in Q1 and a 23% decrease in Q2 to align with the strip. For natural gas, the analyst has updated Henry Hub prices downward by 13% to account for Q1 actuals and an average of 24% for the rest of the year to align with the strip.

According to Insider Monkey’s fourth quarter database, 44 hedge funds were bullish on Southwestern Energy Company (NYSE:SWN), compared to 51 funds in the prior quarter. D E Shaw is the largest stakeholder of the company, with 19.4 million shares worth $113.4 million. 

Here is what Greenlight Capital has to say about Southwestern Energy Company (NYSE:SWN) in its Q1 2022 investor letter:

“SWN is the second largest producer of natural gas in the U.S. The company is well-situated to satisfy growing domestic and export demand. Over the short, medium and long term, Europe now intends to reduce its reliance on Russian energy and increase its use of U.S. LNG. Based on its 2021 year-end reserves – which assumed a $3.60/MMBtu long-term natural gas price – SWN has a PV-104 value of $13.83 per share. By the end of the first quarter, the U.S. natural gas 5-year forward curve averaged $4.28/MMBtu, while international seaborne LNG was close to $20/MMBtu. Over the intermediate term, with the benefit of substantial global investment in infrastructure, we expect prices for U.S. and international natural gas to converge. We acquired our shares at an average price of $6.58. SWN shares ended the quarter at $7.17.”