In this article, we will be taking a look at 7 energy stocks to buy now according to billionaire Leon Cooperman.
Leon Cooperman, an American billionaire investor and hedge fund manager, is the chairman and CEO of one of the top operating hedge funds in the US, Omega Advisors. Based in New York, Cooperman’s investment advisory firm is responsible for over $3.3 billion in assets under management, with most of this figure being his personal wealth.
Seeing a recession in 2023, Cooperman stated in a recent interview with Bloomberg that he preferred stocks over bonds because US treasury yields continue to seem too low this year. Cooperman noted that while there had been real returns from buying bonds in the past, inflation was at 8.6% currently, while the 10-year Treasury yield was only 3%. This makes him prefer stocks to bonds. Expecting a recession sometime in 2023, Cooperman believes it is possible that equities would fall further while the S&P 500 will drop to somewhere between 35% to 40% below its peak.
With a portfolio valued at over $1.9 billion, and investing in a range of diversified sectors such as the technology, services, basic materials, and financial sectors, Omega Advisors is now known as one of the top hedge funds in the US. The hedge fund’s success is attributed to Cooperman’s classic value investment strategy. He aims to identify undervalued stocks, hoping to come across mispriced assets that can be bought at a discount while the rest of the market underestimates them. Since its inception, Cooperman’s main fund has brought in annualized returns of 12.4% versus the S&P 500’s 9.5% return, including reinvested dividends, according to CNBC.
While Cooperman’s investment portfolio is incredibly diverse, as of April 2022, 20% of his portfolio consisted of energy stocks. The billionaire investor prefers energy stocks as they are cheaper investments in comparison to commodities. Energy stocks such as Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), and General Electric Company (NYSE:GE) have generally outperformed the market in 2022, with the sector being up 20% year to date as of this July, according to Reuters. The sector was one of 11 S&P 500 sectors still performing positively this year, while the overall S&P 500 has dropped 19.8% so far.
Leon Cooperman of Omega Advisors
Our Methodology
The stocks selected for our list below were chosen from Leon Cooperman’s Q4’2021 filings.
Energy Stocks to Buy Now According to Billionaire Leon Cooperman
7. Enterprise Products Partners L.P. (NYSE:EPD)
Omega Advisors’ Stake Value: $4,747,000
Percentage of Omega Advisors’ 13F Portfolio: 0.23%
Number of Hedge Fund Holders: 19
Enterprise Products Partners L.P. (NYSE:EPD) is an energy company providing midstream energy services to producers and consumers of natural gas, natural gas liquids, crude oil, petrochemicals, and refined products.
As of this July, UBS analyst Joseph Parkhill holds a Buy rating on Enterprise Products Partners L.P. (NYSE:EPD) shares. The analyst also raised his price target on the stock to $33, signifying upside potential for the company’s shares.
In the first quarter of 2022, 19 hedge funds were long Enterprise Products Partners L.P. (NYSE:EPD), with a total stake value of $177.5 million. Of these funds, First Eagle Investment Management was the largest stakeholder in the company, holding 3,275,675 shares worth $84.5 million.
Like Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), and General Electric Company (NYSE:GE), Enterprise Products Partners L.P. (NYSE:EPD) is among the top energy stocks to invest in today.
6. Pioneer Natural Resources Company (NYSE:PXD)
Omega Advisors’ Stake Value: $25,463,000
Percentage of Omega Advisors’ 13F Portfolio: 1.3%
Number of Hedge Fund Holders: 54
Pioneer Natural Resources Company (NYSE:PXD) is next on our list of energy stocks to buy now according to billionaire Leon Cooperman. The company is an independent oil and gas exploration and production corporation based in the US. It explores for, develops, and produces oil, natural gas liquids, and gas.
Nitin Kumar, an analyst at Wells Fargo, holds an Overweight rating on Pioneer Natural Resources Company (NYSE:PXD) shares as of this July. The analyst has also indicated that there is significant upside potential in the stock, having raised his price target on its shares to $284.
Out of 912 hedge funds, 54 hedge funds were long Pioneer Natural Resources Company (NYSE:PXD) in the first quarter of 2022, with a total stake value of $1.04 billion. In the previous quarter, 43 funds were long the stock, with a total stake value of $1.01 billion.
5. NRG Energy, Inc. (NYSE:NRG)
Omega Advisors’ Stake Value: $25,848,000
Percentage of Omega Advisors’ 13F Portfolio: 1.3%
Number of Hedge Fund Holders: 31
NRG Energy, Inc. (NYSE:NRG) is an integrated power company operating in the US. It utilizes a range of energy sources such as natural gas, coal, oil, solar, nuclear, and battery storage to generate electricity. This electricity is then sold and delivered to about six million residential, commercial, industrial, and wholesale customers.
Morgan Stanley’s Stephen Byrd maintained his Overweight rating on shares of NRG Energy, Inc. (NYSE:NRG) this June. The analyst also has a price target of $46 on the company’s shares.
This May, as the energy sector led the S&P 500 because of rising crude oil prices, a number of energy stocks soared and outperformed the broader benchmark. NRG Energy, Inc. (NYSE:NRG) was among the notable gainers in the S&P 500.
NRG Energy, Inc. (NYSE:NRG) had 31 hedge funds holding stakes in it in the first quarter of 2022. Their total stake value was $1.5 billion. Pzena Investment Management was the largest stakeholder in the company out of all these funds, holding 18,654,573 shares worth $715.6 million.
4. Energy Transfer L.P. (NYSE:ET)
Omega Advisors’ Stake Value: $57,610,000
Percentage of Omega Advisors’ 13F Portfolio: 2.9%
Number of Hedge Fund Holders: 31
Energy Transfer L.P. (NYSE:ET) is a provider of energy-related services, and is next on our list of energy stocks to buy now according to billionaire Leon Cooperman. The company owns and operates 11,600 miles of natural gas transportation pipeline, alongside three natural gas storage facilities in Texas and two more facilities in the state of Texas and Oklahoma.
As of this May, Elvira Scotto, an analyst at RBC Capital, holds an Outperform rating on Energy Transfer L.P. (NYSE:ET) shares. The analyst hold raised the price target on the stock to $15.
Insider Monkey’s first quarter of 2022 hedge fund data shows 31 hedge funds long Energy Transfer L.P. (NYSE:ET) in that quarter. Their total stake value was $699.4 million. Compared to this figure, in the previous quarter 36 hedge funds were long the stock, with a total stake value of $635.6 million.
Trinity Industries, Inc. (NYSE:TRN) is among the most popular stocks investors are eyeing in 2022, just like Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), and General Electric Company (NYSE:GE).
3. Trinity Industries, Inc. (NYSE:TRN)
Omega Advisors’ Stake Value: 58,890,000
Percentage of Omega Advisors’ 13F Portfolio: 2.9%
Number of Hedge Fund Holders: 16
Trinity Industries, Inc. (NYSE:TRN) is an industrials company providing rail and transportation products and services to industrial shipper and railroad companies in the energy industry, among others. The company also serves railroads, leasing companies, and industrial shippers of products in the energy, agriculture, and construction industries among others.
Allison Poliniak Cusic, an analyst at Wells Fargo, holds an Overweight rating on Trinity Industries, Inc. (NYSE:TRN) shares as of this July. She also raised her price target on the stock to $36.
This May, Trinity Industries, Inc. (NYSE:TRN) also announced its quarterly dividend of $0.2 per share. This marks 12 years of dividend growth for the company, making it a viable option for income investors looking to earn reliable passive income through dividends.
There were 16 hedge funds holding stakes in Trinity Industries, Inc. (NYSE:TRN) in the first quarter of 2022, with a total stake value of $134 million.
2. Coterra Energy Inc. (NYSE:CTRA)
Omega Advisors’ Stake Value: $60,800,000
Percentage of Omega Advisors’ 13F Portfolio: 3.1%
Number of Hedge Fund Holders: 39
Coterra Energy Inc. (NYSE:CTRA) is an independent oil and gas company. It engages in the development, exploration, and production of oil, natural gas, and natural gas liquids in the US.
Wells Fargo analyst Nitin Kumar holds an Overweight rating on Coterra Energy Inc. (NYSE:CTRA) shares as of this July. The analyst has also raised the price target on Coterra Energy Inc. (NYSE:CTRA) shares to $46.
In the first quarter of 2022, 39 hedge funds were long Coterra Energy Inc. (NYSE:CTRA). Their total stake value was $551.5 million. In the previous quarter, 37 hedge funds were long the stock, with a total stake value of $499.9 million.
Diamond Hill Capital, an investment management firm, mentioned Coterra Energy Inc. (NYSE:CTRA) in its first quarter of 2022 investor letter. Here’s what they said:
“Amid a rocky market environment, our portfolio’s negative returns still outpaced the Russell 2000 Index by a healthy margin in Q1. Relative performance was aided by strength among our consumer staples holdings — in aggregate, their positive returns outpaced the market. We were further aided by our above-benchmark exposure. We exited Coterra Energy (NYSE:CTRA), taking advantage of higher share prices in response to the run-up in commodities to reallocate to other opportunities.”
1. Devon Energy Corporation (NYSE:DVN)
Omega Advisors’ Stake Value: $119,881,000
Percentage of Omega Advisors’ 13F Portfolio: 6.02%
Number of Hedge Fund Holders: 66
Devon Energy Corporation (NYSE:DVN) is another independent energy company. It makes up over 6% of Omega Advisors’ portfolio according to their latest 13F holdings. The company explores, develops, and produces oil, natural gas, and natural gas liquids in the US. It is also dedicated to hydrocarbon exploration in the US and is based in Oklahoma City.
Neil Mehta, an analyst at Goldman Sachs, holds a Neutral rating on Devon Energy Corporation (NYSE:DVN) shares as of this July. The analyst also has a $61 price target on the stock.
Out of 912 hedge funds, 66 funds were long Devon Energy Corporation (NYSE:DVN) in the first quarter of 2022. Their total stake value was $1.9 billion.
See also Bill Gates’ Stock Portfolio: Top 15 Picks and 10 Best Stocks To Invest In Right Now.
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Disclaimer: None. 7 Best Energy Stocks to Buy Now According to Billionaire Leon Cooperman is originally published on Insider Monkey.
