In this article, we discuss the 7 oil and gas stocks to buy according to billionaire Leon Cooperman.
Billionaire Leon Cooperman comes from a humble background as the son of a plumber who grew up in a Jewish family in South Bronx. Mr. Cooperman attended Hunter College and worked as a Xerox quality control engineer in the mid-sixties until he went to Columbia Business School for an MBA. Upon graduating from Columbia Business School in 1967, Mr. Cooperman was recruited by Goldman Sachs. The now billionaire spent most of his days at Goldman Sachs in the Investment Research Department as partner-in-charge, co-chairman of the Investment Policy Committee, and chairman of the Stock Selection Committee. In 1989, he became chairman and chief executive officer of Goldman Sachs Asset Management and was chief investment officer of the equity product line including managing the GS Capital Growth Fund.
Mr. Cooperman was voted the number one portfolio strategist in the Institutional Investor “All-America Research Team” survey during his time at Goldman Sachs. Mr. Cooperman retired from his positions at Goldman Sachs in 1991 and went on to establish Omega Advisors, a $3.4 billion hedge fund headquartered in New York City.
The oil and gas industry is picking up the pace for a comeback. Oil prices are raging and are going up by 45% this year as a result of the vaccine roll-out and ongoing economic recovery. Massive production cuts by the Organization of Petroleum Exporting Countries (OPEC) and its non-OPEC allies are also acting as a catalyst for the rise in oil prices. Investors are noticing this spike, and are moving towards buying shares in these companies to reap profits from the stock market.
Omega Advisors recently disclosed its 13F holdings data for the second quarter of 2020. Even though there are currently 7 oil and gas companies present in Leon Cooperman’s investment portfolio, the billionaire has also made investments in some notable corporations such as Alphabet Inc. (NASDAQ:GOOG), Facebook, Inc. (NASDAQ:FB), and Microsoft Corporation (NASDAQ:MSFT).
He has not only invested in tech giants like Alphabet Inc., Facebook, Inc., and Microsoft Corporation, but also in oil and gas companies such as Pioneer Natural Resources Company (NYSE:PXD), NRG Energy, Inc. (NYSE:NRG), Devon Energy Corporation (NYSE:DVN), Cabot Oil & Gas Corporation (NYSE:COG), and Falcon Minerals Corporation (NASDAQ:FLMN).
While Leon Cooperman’s reputation remains immaculate, the same can’t be said of the hedge fund industry as a whole, as its reputation has been tarnished in the last decade during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Our Methodology
With this context in mind, here are 7 oil and gas stocks to buy according to billionaire Leon Cooperman. These were ranked according to the investment portfolio of Omega Advisors at the end of the second quarter of 2021.
7 Oil and Gas Stocks to Buy According to Billionaire Leon Cooperman
7. Cabot Oil & Gas Corporation (NYSE:COG)
Cooperman’s Stake Value: $1,487,000
Percentage of Leon Cooperman’s 13F Portfolio: 0.08%
Number of Hedge Fund Holders: 25
Cabot Oil & Gas Corporation is an independent oil and gas company that explores for, exploits, develops, produces, and markets oil and gas properties in the United States. It primarily focuses on the Marcellus Shale with approximately 175,000 net acres in the dry gas window of the play located in Susquehanna County, Pennsylvania. Cabot Oil & Gas Corporation sells its natural gas to industrial customers, local distribution companies, gas marketers, and power generation facilities through gathering systems and pipelines. As of December 31, 2020, Cabot Oil & Gas Corporation had proved reserves of approximately 13,672 billion cubic feet of gas; and 15 thousand barrels of oil or other liquid hydrocarbons. Cabot Oil & Gas Corporation was incorporated in 1989 and is headquartered in Houston, Texas.
This July, Mizuho analyst Vincent Lovaglio raised his price target on Cabot Oil & Gas Corporation to $22 from $21 and reiterated a Neutral rating on the shares.
By the end of the second quarter of 2021, 25 hedge funds out of the 873 tracked by Insider Monkey held stakes in Cabot Oil & Gas Corporation worth $348.75 million. This is compared to 20 hedge funds in the previous quarter with a total stake value of approximately $135 million.
Palm Valley Capital Management, an investment management firm, published its second-quarter 2021 investor letter, in which it mentioned Cabot Oil & Gas Corporation. Here’s their take on the company:
“During the quarter we purchased Cabot Oil & Gas (ticker:COG). Cabot is an exploration and production company focused on natural gas and the Marcellus Shale. Cabot prides itself on being a low-cost producer that generates attractive returns on capital and free cash flow. Due to its reserve base and low-cost structure (all-in operating expenses were $1.43/mcf in 2020), Cabot has been able to generate free cash flow for five consecutive years. The company has used its free cash flow to pay a dividend, buy back stock, and reduce debt. Cabot’s dividend is currently yielding 2.7%. The company is committed to returning at least of 50% of free cash flow to shareholders. We think Cabot, along with several other exploration and production companies, are transforming from focusing on growing production to generating and returning free cash flow.
We initially purchased Cabot on April 30, 2021. On May 24th, Cabot announced a merger agreement with Cimarex Energy. Cimarex is an exploration and production company with reserves in the Permian and Anadarko basins. Cimarex is also considered a low-cost producer, but with a higher mix of oil. The merger is expected to diversify the combined company’s asset mix, which management believes will allow it to generate free cash flow across a wide range of commodity price scenarios. At $60 oil and $3 natural gas, the merged firm is expected to generate $5.7 billion in free cash flow over the next three years, or a 12% annualized free cash flow yield. We expect a meaningful portion of this free cash flow to be distributed to shareholders in the form of regular and variable dividends. Assuming current energy prices hold, we believe the combined company will generate a dividend yield greater than most regulated utilities.”
6. Falcon Minerals Corporation (NASDAQ:FLMN)
Cooperman’s Stake Value: $8,328,000
Percentage of Leon Cooperman’s 13F Portfolio: 0.46%
Number of Hedge Fund Holders: 25
Falcon Minerals Corporation acquires and owns mineral, royalty, and overriding royalty interests in oil and natural gas properties in North America. It owns interests covering approximately 256,000 gross unit acres in the Eagle Ford Shale and Austin Chalk in Karnes, DeWitt, and Gonzales Counties in Texas, as well as approximately 75,000 gross unit acres in the Marcellus Shale across Pennsylvania, Ohio, and West Virginia. Falcon Minerals Corporation is based in New York.
Falcon Minerals Corporation comes sixth on the 7 oil and gas stocks to buy according to billionaire Leon Cooperman. Mr. Cooperman’s latest portfolio reports that the billionaire owns more than 1.6 million shares in Falcon Minerals Corporation, worth roughly $8.3 million.
By the end of the second quarter of 2021, 25 hedge funds out of the 873 tracked by Insider Monkey held stakes in Falcon Minerals Corporation worth $42.8 million. This is compared to 21 hedge funds in the previous quarter with a total stake value of approximately $42.7 million.
Just like Alphabet Inc., Facebook, Inc., and Microsoft Corporation, Falcon Minerals Corporation is one of the stocks that promise high returns according to Mr. Cooperman.
5. Enterprise Products Partners L.P. (NYSE:EPD)
Cooperman’s Stake Value: $12,065,000
Percentage of Leon Cooperman’s 13F Portfolio: 0.67%
Number of Hedge Fund Holders: 28
Enterprise Products Partners L.P. (NYSE:EPD) provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products. Enterprise Products Partners L.P. operates through four segments: NGL Pipelines & Services, Crude Oil Pipelines & Services, Natural Gas Pipelines & Services, and Petrochemical & Refined Products Services. Enterprise Products Partners L.P. was founded in 1968 and is headquartered in Houston, Texas.
This April, TD Securities analyst Linda Ezergailis initiated coverage of Enterprise Products with a Buy rating and $28 price target.
By the end of the second quarter of 2021, 28 hedge funds out of the 873 tracked by Insider Monkey held stakes in Enterprise Products Partners L.P. worth $246 million. This is compared to 26 hedge funds in the previous quarter with a total stake value of approximately $299 million.
Enterprise Products Partners L.P. is one of the oil and gas investments of Mr. Cooperman. Other investments that belong to different industries include Alphabet Inc., Facebook, Inc., and Microsoft Corporation.
ClearBridge Investments, an investment management firm, published its “Large Cap Value Strategy” first quarter 2021 investor letter, in which the firm mentioned Enterprise Products Partners L.P.. Here’s their take on the company:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names (including) Enterprise Products Partners LP. We are positive on this company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
4. Pioneer Natural Resources Company (NYSE:PXD)
Cooperman’s Stake Value: $22,753,000
Percentage of Leon Cooperman’s 13F Portfolio: 1.27%
Number of Hedge Fund Holders: 45
Pioneer Natural Resources Company operates as an independent oil and gas exploration and production company in the United States. The company explores for, develops, and produces oil, natural gas liquids (NGLs), and gas. Pioneer Natural Resources Company has operations in the Permian Basin in West Texas.
This September, Goldman Sachs analyst Neil Mehta added Pioneer Natural Resources Company to the firm’s Americas Conviction List and reiterated a Buy rating on the shares with a $196 price target.
Pioneer Natural Resources Company is the fourth oil and gas stock to buy according to Leon Cooperman’s latest 13F portfolio. The billionaire owns 140,000 shares in the company that are worth more than $22.7 million.
By the end of the second quarter of 2021, 45 hedge funds out of the 873 tracked by Insider Monkey held stakes in Pioneer Natural Resources Company worth $876.3 million. This is compared to 37 hedge funds in the previous quarter with a total stake value of approximately $623 million.
Like Alphabet Inc., Facebook, Inc., and Microsoft Corporation, Pioneer Natural Resources Company is one of the most valuable investments made by Mr. Cooperman.
3. NRG Energy, Inc. (NYSE:NRG)
Cooperman’s Stake Value: $27,404,000
Percentage of Leon Cooperman’s 13F Portfolio: 1.53%
Number of Hedge Fund Holders: 33
NRG Energy, Inc. is an American energy-giant, headquartered in Houston, Texas. NRG Energy, Inc. is involved in energy generation and retail electricity. Their portfolio includes natural gas generation, coal generation, oil generation, nuclear generation, wind generation, utility-scale generation, and distributed solar generation. NRG Energy, Inc. serves 2.9 million retail customers in Texas, Connecticut, Delaware, Illinois, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Ohio, and the District of Columbia.
This June, Seaport Global analyst Angie Storozynski raised the price target on NRG Energy, Inc. to $47 from $42 and reiterated a Buy rating on the shares.
NRG Energy, Inc. is among the top 3 oil and gas stocks to buy according to Leon Cooperman’s latest 13F portfolio. The billionaire owns 680,000 shares in the company that are worth more than $27.4 million.
By the end of the second quarter of 2021, 33 hedge funds out of the 873 tracked by Insider Monkey held stakes in NRG Energy, Inc. worth $1.9 billion. This is compared to 35 hedge funds in the previous quarter with a total stake value of approximately $1.6 billion.
NRG Energy, Inc. contributes significantly to Mr. Cooperman’s 13F portfolio. Other notable contributors are Alphabet Inc., Facebook, Inc., and Microsoft Corporation.
2. Energy Transfer LP (NYSE:ET)
Cooperman’s Stake Value: $71,620,000
Percentage of Leon Cooperman’s 13F Portfolio: 4.02%
Number of Hedge Fund Holders: 29
Energy Transfer LP (NYSE:ET) provides energy-related services. The company owns and operates approximately 9,400 miles of natural gas transportation pipelines and three natural gas storage facilities in Texas, and 12,340 miles of interstate natural gas pipelines. It also sells natural gas to electric utilities, independent power plants, local distribution companies, industrial end-users, and other marketing companies. In addition, the company owns and operates natural gas gathering and natural gas liquid (NGL) pipelines, processing plants, and treating and conditioning facilities in Texas, New Mexico, West Virginia, Pennsylvania, Ohio, Oklahoma, Kansas, and Louisiana. Energy Transfer LP was founded in 1996 and is headquartered in Dallas, Texas.
This September, Citi analyst Timm Schneider raised his price target on Energy Transfer LP to $15 from $14 and reiterated a Buy rating on the shares.
According to Leon Cooperman’s latest 13F portfolio, the billionaire owns over 6.73 million shares in Energy Transfer LP that are worth more than $71.62 million. The investment covers 4.02% of Mr. Cooperman’s investment portfolio.
As of the second quarter of 2021, Energy Transfer LP reported an EPS of $0.20, missing estimates by -$0.07. The company also reported revenues of $15.1 billion, up 105.79% year-over-year, and beating estimates by $178.09 million. Energy Transfer LP has gained 19.82% over the past six months, and 51.64% year to date.
By the end of the second quarter of 2021, 29 hedge funds out of the 873 tracked by Insider Monkey held stakes in Energy Transfer LP worth $835.2 million. This is compared to 25 hedge funds in the previous quarter with a total stake value of approximately $647.7 million.
Miller Value Partners recently released their second-quarter 2021 Investor Letter, in which the firm mentioned Energy Transfer LP. Here’s what they had to say:
“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 Core 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 f low 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.”
1. Devon Energy Corporation (NYSE:DVN)
Cooperman’s Stake Value: $91,075,000
Percentage of Leon Cooperman’s 13F Portfolio: 5.11%
Number of Hedge Fund Holders: 50
Devon Energy Corporation is an independent energy company that primarily engages in the exploration, development, and production of oil, natural gas, and natural gas liquids in the United States. It operates approximately 3,942 gross wells. Devon Energy Corporation was founded in 1971 and is headquartered in Oklahoma City, Oklahoma.
This July, Piper Sandler analyst Mark Lear raised his price target on Devon Energy Corporation to $37 from $34 and kept an Overweight rating on the shares. The exploration and production group has come under pressure since the start of the third quarter on concerns the post-pandemic recovery “could potentially hit a snag,” but the “de-rate presents another attractive entry opportunity,” Lear told investors in a research note.
According to Leon Cooperman’s latest 13F portfolio, the billionaire owns over 3.12 million shares in Devon Energy Corporation that are worth more than $91 million. The investment covers an impressive 5.11% of Mr. Cooperman’s investment portfolio.
As of the second quarter of 2021, Devon Energy Corporation reported earnings per share of $0.60, beating estimates by $0.07. The company generated revenues of $2.42 billion, a 513.45% year-over-year increase, and beat estimates by $367.95 million. Devon Energy Corporation has gained 40% over the past six months, and 88.72% year to date.
By the end of the second quarter of 2021, 50 hedge funds out of the 873 tracked by Insider Monkey held stakes in Devon Energy Corporation worth over $1 billion. This is compared to 52 hedge funds in the previous quarter with a total stake value of approximately $1.46 billion.
GoodHaven Capital Management, a concentrated portfolio investment management firm, published its fourth-quarter 2020 investor letter, in which the firm mentioned Devon Energy Corporation. Here’s their verdict:
“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.”
See also 10 Best Cheap Oil Stocks to Buy in 2021 and 10 Best Oil Stocks that Pay Dividends
Follow Insider Monkey on Twitter
Suggested articles:
- 10 Cheap Oil Stocks Under $10
- Top Stocks to Invest In According to Jeffrey Ubben’s ValueAct Capital
- Top 10 Oil and Gas Stocks to Invest In
This article is originally published at Insider Monkey.
