In this article, we discuss 10 energy stocks to buy according to Joe Huber’s Huber Capital Management.
Joe Huber is the chief executive officer and chief investment officer of Huber Capital Management, which is an investment advisory firm based in California, providing its expertise to diverse clients including institutional investors, wealthy individuals, and mutual funds. Joe Huber manages assets under management of $328.93 million, and a 13F portfolio worth $387.1 million as per the 13F filings from Q3 2021.
Huber Capital Management’s third quarter investments are concentrated in the finance, healthcare, information technology, industrials, energy, and consumer discretionary sectors, with the top ten holdings comprising 41.62% of the fund’s total 13F securities. In Q3 2021, Joe Huber made additional purchases in 31 stocks, sold off shares entirely in 1 company, and reduced holdings in 51 securities.
The top buys at Huber Capital Management include JAKKS Pacific, Inc. (NASDAQ:JAKK), Enova International, Inc. (NYSE:ENVA), and The Gap, Inc. (NYSE:GPS). Whereas, the fund reduced holdings in Golar LNG Limited (NASDAQ:GLNG), TETRA Technologies, Inc. (NYSE:TTI), and Carter’s, Inc. (NYSE:CRI).
The most notable stocks in the third quarter portfolio of Huber Capital Management include Microsoft Corporation (NASDAQ:MSFT), Bank of America Corporation (NYSE:BAC), and Mastercard Incorporated (NYSE:MA).
Joe Huber of Huber Capital Management
Our Methodology
We used the Q3 portfolio of Joe Huber’s Huber Capital Management for this analysis, selecting the top energy stock picks of the hedge fund. The stocks are ranked according to the stake value of Huber Capital Management in each holding.
Energy Stocks to Buy According to Joe Huber’s Huber Capital Management
10. Black Hills Corporation (NYSE:BKH)
Huber Capital Management’s Stake Value: $874,000
Percentage of Huber Capital Management’s 13F Portfolio: 0.22%
Number of Hedge Fund Holders: 16
Headquartered in South Dakota, Black Hills Corporation (NYSE:BKH) is a diversified energy company that supplies electricity and gas throughout South Dakota, Montana, Wyoming, Colorado, Arkansas, Kansas, Nebraska, and Iowa. Huber Capital Management owns 13,926 Black Hills Corporation (NYSE:BKH) shares as of Q3 2021, worth $874,000, representing 0.22% of the fund’s 13F investments for the period.
On January 26, Black Hills Corporation (NYSE:BKH) declared a $0.595 per share quarterly dividend, in line with its prior dividend payout. It is distributable on March 1, to shareholders of record on February 14. Black Hills Corporation (NYSE:BKH) has a solid dividend history, and the company has consistently raised its dividends for 51 years.
Mizuho analyst Paul Fremont on February 7 upgraded Black Hills Corporation (NYSE:BKH) to Buy from Neutral with an unchanged price target of $71. The current valuation provides a “free option” if the company decides to transition its business mix away from gas, while avoiding equity issuance in the process, the analyst told investors in a research note, citing the stock’s valuation for the upgrade.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 16 hedge funds were bullish on Black Hills Corporation (NYSE:BKH), with stakes equaling $55.9 million, as compared to 14 funds holding stakes worth $62.5 million in Black Hills Corporation (NYSE:BKH) in the previous quarter. Mario Gabelli’s GAMCO Investors held the largest stake in Black Hills Corporation (NYSE:BKH) in the third quarter of 2021, with 201,491 shares valued at $12.6 million.
In addition to Microsoft Corporation (NASDAQ:MSFT), Bank of America Corporation (NYSE:BAC), and Mastercard Incorporated (NYSE:MA), Black Hills Corporation (NYSE:BKH) is a notable stock from the third quarter portfolio of Huber Capital Management.
9. Exelon Corporation (NASDAQ:EXC)
Huber Capital Management’s Stake Value: $1,239,000
Percentage of Huber Capital Management’s 13F Portfolio: 0.32%
Number of Hedge Fund Holders: 36
Exelon Corporation (NASDAQ:EXC) is a Chicago-based producer of electric power and natural gas, providing its services in 48 states, the District of Columbia, and Canada. Exelon Corporation (NASDAQ:EXC) is one of the leading American electric companies, with revenue for the third quarter of 2021 totaling $8.91 billion, clocking in above market consensus.
In the third quarter of 2021, Joe Huber’s fund held 25,633 Exelon Corporation (NASDAQ:EXC) shares, worth $1.23 million, representing 0.32% of Huber Capital Management’s total 13F securities.
Barclays analyst Eric Beaumont reinstated coverage of Exelon Corporation (NASDAQ:EXC) on February 7 with an Equal Weight rating and a $46 price target. According to the analyst, Exelon Corporation (NASDAQ:EXC) is now a pure regulated transmission and distribution company, which will result in more stable and predictable earnings and growth. The analyst’s neutral rating reflects the stock’s current risk/reward opportunity.
On February 2, Exelon Corporation (NASDAQ:EXC) shares dropped 28.2% in pre-market trading as the company announced the completion of the separation of Constellation Energy Corporation (NASDAQ:CEG), its former power generation and competitive energy business.
According to the hedge funds monitored by Insider Monkey in Q3 2021, 36 funds were bullish on Exelon Corporation (NASDAQ:EXC), with stakes totaling $1.10 billion. Adage Capital Management is the largest stakeholder of the company as of the third quarter, with 1.8 million shares worth $89.2 million.
Here is what ClearBridge Global Infrastructure Value Strategy has to say about Exelon Corporation (NASDAQ:EXC) in its Q3 2021 investor letter:
“Turning to the U.S. and Canada region, U.S. electric utility Exelon performed well during the quarter. Exelon is a U.S. energy provider with one of the cleanest and lowest-cost power generation fleets. Its utilities serve millions of electric and gas customers across Delaware, Illinois, Maryland, New Jersey, Pennsylvania and the District of Columbia. The share price of Exelon benefited from rising power prices and potential federal support for nuclear energy.”
8. Devon Energy Corporation (NYSE:DVN)
Huber Capital Management’s Stake Value: $1,300,000
Percentage of Huber Capital Management’s 13F Portfolio: 0.33%
Number of Hedge Fund Holders: 48
Devon Energy Corporation (NYSE:DVN) is a company based in Oklahoma, engaged in hydrocarbon exploration, petroleum, natural gas, and natural gas liquids. Huber Capital Management owns 36,600 Devon Energy Corporation (NYSE:DVN) shares as of Q3 2021, worth $1.30 million, accounting for 0.33% of the fund’s total 13F investments.
Goldman Sachs analyst Neil Mehta downgraded Devon Energy Corporation (NYSE:DVN) on January 21 to Neutral from Buy with a price target of $52, up from $46. The analyst cited valuation for the downgrade, following the stock’s relative and absolute outperformance in 2021. He now sees limited upside to Devon Energy Corporation (NYSE:DVN) shares relative to peers.
On December 8, Devon Energy Corporation (NYSE:DVN) declared a $0.84 per share quarterly dividend, which is a 71.4% increase from its prior dividend of $0.49. The dividend was paid on December 30, to shareholders of record on December 10.
In Q3 2021, 48 hedge funds were bullish on Devon Energy Corporation (NYSE:DVN), with stakes totaling $1.40 billion, as compared to 50 funds in the quarter earlier, holding stakes worth $1.03 billion in Devon Energy Corporation (NYSE:DVN).
Rajiv Jain’s GQG Partners elevated its position in Devon Energy Corporation (NYSE:DVN) by 87103% in the third quarter, holding roughly 14 million shares worth approximately $494 million. GQG Partners is the biggest Devon Energy Corporation (NYSE:DVN) stakeholder.
Here is what GoodHaven Capital Management has to say about Devon Energy Corporation (NYSE:DVN) in their Q4 2020 investor letter:
“After a rough start to the year our two biggest energy holdings – WPX Energy rebounded materially in the last six months though energy was still our biggest detractor for the year. I’ve previously written about deciding earlier this year to direct new capital towards better businesses versus adding more to the energy sector, but given the material optionality at WPX, we opted to maintain a material exposure. Recently WPX announced an all stock merger with a larger competitor – Devon Energy – which will leave the new company with plenty of cash flow at lower oil prices, less leverage, and material upside to higher commodity prices.”
7. National Fuel Gas Company (NYSE:NFG)
Huber Capital Management’s Stake Value: $2,495,000
Percentage of Huber Capital Management’s 13F Portfolio: 0.64%
Number of Hedge Fund Holders: 19
National Fuel Gas Company (NYSE:NFG) is a New York-based energy company that provides natural gas and oil to industrial, commercial, and residential users located in New York and Pennsylvania. Joe Huber, via Huber Capital Management, boosted his stake in National Fuel Gas Company (NYSE:NFG) in Q3 2021, holding 47,500 shares worth $2.49 million, representing 0.64% of the Q3 investments.
Publishing its Q4 results on February 3, National Fuel Gas Company (NYSE:NFG) posted earnings per share of $1.48, beating estimates by $0.15. Revenue over the period increased roughly 24% year-over-year to $546.56 million, outperforming estimates by $3.07 million.
BofA analyst John Abbott reinstated coverage of National Fuel Gas Company (NYSE:NFG) on January 10 with an Underperform rating and a $66 price target. National Fuel Gas Company (NYSE:NFG)’s position as a diversified energy company with four segments limits it upside since he prefers higher beta “oil” names for the increased exposure to what he sees as a more constructive outlook versus U.S. gas, the analyst told investors in a research note.
On December 3, National Fuel Gas Company (NYSE:NFG) declared a quarterly dividend of $0.455 per share, in line with previous. The dividend was paid on January 14, to shareholders of record on December 31.
Billionaire Ken Griffin’s Citadel Investment Group is the biggest National Fuel Gas Company (NYSE:NFG) stakeholder as of Q3 2021, with 488,387 shares worth $25.65 million. Overall, 19 hedge funds were long National Fuel Gas Company (NYSE:NFG) in the third quarter, up from 12 funds in the quarter earlier.
Here is what Heartland Value Fund has to say about National Fuel Gas Company (NYSE:NFG) in its Q1 2021 investor letter:
“The ho-hum Utilities sector isn’t typically a place to hunt for strong growth prospects. However, for investors willing to do their homework, opportunities do exist. Portfolio holding National Fuel Gas Company (NFG) is a prime example.
NFG is a dividend aristocrat—50 consecutive years of dividend increases. Although the business is lumped in with run-of-the-mill power companies, it is much more diverse. In addition to its utility operations, a pipeline and storage division produces almost a quarter of its profits, and the company generates nearly 40% of its bottom line from natural gas exploration and production.
Shares of NFG are trading at a mid-teens discount to their historic average based on price/book. Given the state of the energy industry over the past few years, we believe the company’s gas unit could be an overlooked source of growth. Additionally, the utility recently received regulatory approval on a natural gas pipeline expansion in Pennsylvania, which is expected to produce a windfall in free cash flow.”
6. Entergy Corporation (NYSE:ETR)
Huber Capital Management’s Stake Value: $3,107,000
Percentage of Huber Capital Management’s 13F Portfolio: 0.80%
Number of Hedge Fund Holders: 30
Entergy Corporation (NYSE:ETR) is a diversified energy company that supplies carbon and carbon-free energy sources, electric power, and natural gas to residential and commercial customers across Arkansas, Louisiana, Mississippi, and Texas. Huber Capital Management owns a $3.10 million stake in Entergy Corporation (NYSE:ETR) as of the close of the third quarter of 2021, which accounts for 0.80% of the fund’s 13F portfolio.
On January 28, Entergy Corporation (NYSE:ETR) declared a quarterly dividend of $1.01 per share, in line with previous. The dividend is payable on March 1, to shareholders of record on February 11.
Vertical Research analyst Jonathan Arnold on January 10 downgraded Entergy Corporation (NYSE:ETR) to Hold from Buy with a $117 price target.
In Q3 2021, 30 hedge funds held long positions in Entergy Corporation (NYSE:ETR), down from 31 funds in the quarter earlier. Zimmer Partners is a prominent shareholder of Entergy Corporation (NYSE:ETR) as of the third quarter, elevating its position in the stock by 227%, holding 653,200 shares worth $64.8 million.
Just like Microsoft Corporation (NASDAQ:MSFT), Bank of America Corporation (NYSE:BAC), and Mastercard Incorporated (NYSE:MA), hedge funds are piling into Entergy Corporation (NYSE:ETR).
5. ConocoPhillips (NYSE:COP)
Huber Capital Management’s Stake Value: $4,371,000
Percentage of Huber Capital Management’s 13F Portfolio: 1.12%
Number of Hedge Fund Holders: 49
ConocoPhillips (NYSE:COP) is a Texas-based multinational corporation that specializes in hydrocarbon exploration, petroleum, natural gas, natural gas liquids, bitumen, and liquefied natural gas. Joe Huber’s Huber Capital Management owns 64,500 ConocoPhillips (NYSE:COP) shares as of Q3 2021, worth $4.3 million, representing 1.12% of the hedge fund’s total 13F investments.
On February 3, ConocoPhillips (NYSE:COP) posted its Q4 results. The company reported earnings per share of $2.27, beating estimates by $0.08. Revenue for the quarter jumped roughly 164% year-over-year to $15.96 billion, surpassing estimates by $2.56 billion.
ConocoPhillips (NYSE:COP) on February 3 declared a $0.46 per share quarterly dividend, in line with previous. The dividend will be paid on March 1, to shareholders of record on February 14. The company announced an increase of $1 billion in expected 2022 return of capital to shareholders to a new total of $8 billion, which is an increase of more than 30% over 2021.
RBC Capital analyst Scott Hanold raised the price target on ConocoPhillips (NYSE:COP) on February 4 to $110 from $100 and kept an Outperform rating on the shares. The analyst is positive on the company’s total shareholder return of 7%-8%, adding that its portfolio also has “high exposure” to some of the more robust markets such as European gas, LNG, Brent oil, and Permian oil. He further observed that ConocoPhillips (NYSE:COP) has diverse assets and operational opportunities to keep inflation-related costs in check.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 49 funds were bullish on ConocoPhillips (NYSE:COP), with stakes equalling $1.37 billion. Fisher Asset Management held the largest stake in ConocoPhillips (NYSE:COP), with 5.95 million shares worth $403.5 million.
Here is what ClearBridge Large Cap Value Strategy has to say about ConocoPhillips (NYSE:COP) in its Q3 2021 investor letter:
“We also seized the opportunity to add to our position in energy producer ConocoPhillips at what we considered an attractive valuation. The market rewarded this move late in the quarter after ConocoPhillips announced its purchase of Permian Basin assets from Shell, making the company the second-largest oil and gas producer in the contiguous U.S. We view this as a positive strategic transaction for a well-run, ESG-cognizant oil producer. With this and prior transactions, the company continues to press its cost advantage and is well-positioned to benefit from ongoing energy demand recovery to pre-pandemic levels.”
4. Chesapeake Energy Corporation (NASDAQ:CHK)
Huber Capital Management’s Stake Value: $4,441,000
Percentage of Huber Capital Management’s 13F Portfolio: 1.14%
Number of Hedge Fund Holders: 44
Huber Capital Management owns 72,100 Chesapeake Energy Corporation (NASDAQ:CHK) shares as of Q3 2021, worth $4.44 million, representing 1.14% of the fund’s 13F portfolio. Chesapeake Energy Corporation (NASDAQ:CHK) is an Oklahoma-based company engaged in hydrocarbon expansion, known primarily for supplying petroleum and natural gas.
On January 25, Chesapeake Energy Corporation (NASDAQ:CHK) agreed to acquire Chief E&D Holdings and associated non-operating interests for $2 billion in cash and approximately 9.44 million common shares, confirming earlier speculation. The company also announced that it would sell its Powder River Basin assets in Wyoming to Continental Resources, Inc. (NYSE:CLR) for roughly $450 million in cash.
MKM Partners analyst John Gerdes raised the price target on Chesapeake Energy Corporation (NASDAQ:CHK) to $98 from $95 and kept a Buy rating on the shares. The analyst updated his model to reflect the company’s announced acquisition of northern Pennsylvania Marcellus assets from Chief E&D Holdings, along with divesting its Powder River Basin assets.
Among the hedge funds tracked by Insider Monkey, Oaktree Capital Management is the biggest Chesapeake Energy Corporation (NASDAQ:CHK) stakeholder, with roughly 12 million shares worth $735.3 million. Overall, 44 hedge funds were bullish on Chesapeake Energy Corporation (NASDAQ:CHK) in Q3 2021, with stakes totalling $2.1 billion.
3. Chevron Corporation (NYSE:CVX)
Huber Capital Management’s Stake Value: $7,061,000
Percentage of Huber Capital Management’s 13F Portfolio: 1.82%
Number of Hedge Fund Holders: 51
Chevron Corporation (NYSE:CVX) is a California-based company that is engaged in energy, chemical, and petroleum operations worldwide. Huber Capital Management elevated its stake in Chevron Corporation (NYSE:CVX) by 12% in Q3 2021, holding 69,600 shares of the company, worth over $7 million. The stock accounts for 1.82% of the fund’s total 13F investments.
On January 28, Chevron Corporation (NYSE:CVX) posted earnings for the fourth quarter. The company announced an EPS of $2.56, missing consensus estimates by $0.56. Chevron Corporation (NYSE:CVX)’s revenue for the period jumped 90.64% from the prior-year quarter, totalling $48.13 billion, surpassing estimates by $2.83 billion.
Chevron Corporation (NYSE:CVX) declared on January 26 a $1.42 per share quarterly dividend, which is a 6% increase from its prior dividend of $1.34. The dividend is payable on March 10, to shareholders of record on February 16.
Cowen analyst Jason Gabelman raised the price target on Chevron Corporation (NYSE:CVX) on January 31 to $133 from $122 and kept an Outperform rating on the shares. The analyst stated that the near-term stock performance could be uninspiring although the upcoming analyst day could be positive, but raised his price target due to higher oil prices.
According to the hedge funds monitored by Insider Monkey, 51 funds were bullish on Chevron Corporation (NYSE:CVX), with collective stakes equalling $4.44 billion. Billionaire Warren Buffett’s Berkshire Hathaway held the largest position in Chevron Corporation (NYSE:CVX), with 28.70 million shares worth $2.91 billion.
Here is what Goehring & Rozencwajg Associates has to say about Chevron Corporation (NYSE:CVX) 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 publicly 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.”
2. BP p.l.c. (NYSE:BP)
Huber Capital Management’s Stake Value: $10,312,000
Percentage of Huber Capital Management’s 13F Portfolio: 2.66%
Number of Hedge Fund Holders: 29
Headquartered in London, BP p.l.c. (NYSE:BP) produces natural gas, biofuels, wind power, and solar power, in addition to providing de-carbonization solutions and services. Huber Capital Management owns 377,300 BP p.l.c. (NYSE:BP) shares, worth $10.3 million, representing 2.66% of the fund’s third quarter 13F investments.
On November 9, BP p.l.c. (NYSE:BP) declared a $0.3276 per share interim dividend, in line with previous. The dividend was paid on December 17, to shareholders of record on November 12.
JPMorgan analyst Christyan Malek raised the price target on BP p.l.c. (NYSE:BP) to £590 from £570 and kept an Overweight rating on the shares on January 14.
According to the Q3 database of Insider Monkey, 29 hedge funds were bullish on BP p.l.c. (NYSE:BP), with stakes equalling $1.05 billion. In Q3 2021, Arrowstreet Capital held a prominent stake in BP p.l.c. (NYSE:BP), with 4.7 million shares worth $130.4 million.
1. Shell plc (NYSE:SHEL)
Huber Capital Management’s Stake Value: $11,561,000
Percentage of Huber Capital Management’s 13F Portfolio: 2.98%
Number of Hedge Fund Holders: 33
Shell plc (NYSE:SHEL) is a global energy company that supplies crude oil, natural gas, and natural gas liquids. The company was formerly known as Royal Dutch Shell plc and changed its name to Shell plc (NYSE:SHEL) in January 2022. Huber Capital Management owns 259,400 Shell plc (NYSE:SHEL) shares as of Q3 2021, worth $11.5 million, representing 2.98% of the fund’s total 13F securities.
On February 4, Cowen analyst Jason Gabelman raised the price target on Shell plc (NYSE:SHEL) to $58 from $53 and kept an Outperform rating on the shares. The company is exploring ways to upgrade its cash return framework, which could come with the Q2 earnings, the analyst told investors in a research note.
Shell plc (NYSE:SHEL) on February 3 declared a $0.48 per share quarterly dividend, in line with previous. The dividend is payable on March 28, to shareholders of record on February 18. The company also announced share buybacks of $8.5 billion for H1 2022, including $5.5 billion of Permian divestment proceeds.
In Q3 2021, Pzena Investment Management was one of the biggest Shell plc (NYSE:SHEL) stakeholders, with a $179.6 million position in the company. Overall, 33 hedge funds were long Shell plc (NYSE:SHEL) in the third quarter of 2021, down from 38 funds in the prior quarter.
Here is what Goehring & Rozencwajg Associates has to say about Shell plc (NYSE:SHEL) in its Q3 2021 investor letter:
“Royal Dutch Shell’s ESG challenges continue unabated. A Dutch court ruled in May that Royal Dutch Shell must cut its CO2 output by 45% by 2030 to align their policies with the Paris Climate Accord. In a statement issued after the verdict, a Shell spokesperson acknowledged that “urgent action is needed on climate change and the company is accelerating efforts to reduce emissions.” If the pressure from the Dutch court system was not enough, an activist shareholder has proposed breaking the company apart to address ESG concerns. On October 27th, Third Point Management announced the following.
“If Shell pursues this type of strategy it would probably lead to an acceleration of carbon dioxide reduction. […] Breaking Shell into two operating units would create a standalone legacy energy business (upstream, refining, and chemicals) that could slow capex beyond what it has already promised, sell assets, and prioritize return of cash to shareholders which can be reallocated into low-carbon areas of the market.”
Shell has already cut spending dramatically over the last decade. After having peaked at $39 bn in 2013, upstream capital spending fell to only $17 bn in 2020 – a drop of nearly 60%. Spending has barely recovered in the three quarters of 2021. A lack of spending has already impacted production. Proforma for the 2016 acquisition of BG Group, Shell’s total production has fallen 13% since capital spending peaked in 2013. These trends are accelerating: Shell’s production over the first nine months of 2021 have fallen 7% compared with the same period last year.
If Royal Dutch Shell’s upstream capital spending remains at today’s depressed levels, we estimate the company will only be able to replace 30% of production with new reserves and that production will fall 40% over the next nine years. If spending is further curtailed (as is being proposed), Shell’s oil and natural gas production would collapse – something that may have already started.”
You can also take a look at 10 Dividend Stocks Billionaire D. E. Shaw is Buying and Top 10 Stock Picks of NewGen Asset Management.
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Disclosure: None. 10 Energy Stocks to Buy According to Joe Huber’s Huber Capital Management is originally published on Insider Monkey.
