We’ve poured through the latest filing period’s 13F’s of the hedge funds we track and built an exhaustive database of the results. In addition to creating several reports on overall fund activity, we’re also looking at the activity of a very specific group of hedge fund managers: the 59 billionaires we track.
Now don’t get us wrong, we’re not suggesting you could become a billionaire as well, simply by following their top picks. After all, their top picks are largely comprised of large-cap companies that tend to deliver lower margins of return. They simply have too much money to invest it all into small-caps. That said, the top picks of billionaires are not without value, as our research has shown they outperformed the market by 2 percentage points annually between 1999 and 2009. While that’s nowhere near the returns they generate on small-cap stocks (see the details), it comes with some of the benefits of investing in large-cap companies: namely stability and often dividends paid out by the companies to shareholders of record each quarter.
We recently published a list of the 10 most popular stocks among hedge fund billionaires at the close of 2014, which no energy stocks were able to crack. With that in mind, let’s take a look at the top five energy stocks billionaires own coming off a rocky (to say the least) year for the sector in 2014.
5. Hess Corp. (NYSE:HES) is the fifth choice of billionaire hedgies, with 8 funds having a hefty $1.55 billion invested in this company. That’s a large contrast to its ownership among all funds, in which it placed 30th. Paul Singer’s Elliott Associates was by far the biggest investor in Hess, with 17.80 million shares at the end of 2014, and another 1.0 million shares added to that total early in 2015. Steve Cohen and Jim Simons were two other billionaires with stakes in Hess at the close of the year. Hess is up 2.8% year-to-date after weathering 2014 fairly well for an energy company, shedding just 11.14%.
4. Pioneer Natural Resources (NYSE:PXD) lands in fourth, also with 8 billionaire funds, investing $1.61 billion. Pioneer placed much higher than Hess among all funds, landing in seventh, and was one of the few energy stocks last quarter to see some bullish sentiment from hedge funds. While the majority of energy stocks bled fund ownership, Pioneer’s increased from 7.5% to 8%. Andreas Halvorsen, Israel Englander, and Ken Griffin are three of the top billionaire shareholders in Pioneer, which is up 6.75% year-to-date.
3. Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) is a Brazilian oil and gas exploration company, and lands third on the billionaires list, despite coming in at just 29th among all funds. However, like Pioneer, Petroleo was one of the few energy stocks to see an increase in fund ownership last quarter, a very slight gain of 0.2% to 5.2%, despite the firm being embroiled in a corruption scandal in its home country, which has led to two of its executives being charged. Petroleo Brasileiro Petrobas recently announced that it may be forced to sell assets and delay dividend payments as a result of the credit crunch facing the company due to the scandal. Jim Simons has been extremely bullish on Petroleo despite that, massively increasing his position last quarter, while Howard Marks and Ken Fisher are other billionaire investors sticking with it.
2. Devon Energy Corp (NYSE:DVN) lands in second among billionaires, while it landed at eighth among all hedge funds. Nine billionaires are invested in the Oklahoma-based oil and gas producer, including George Soros, who opened a new position on it in the fourth quarter. Devon is another energy stock that braved 2014, quite well, losing less than a percentage point in value, and has gained nearly 4% year-to-date. Ken Griffin and Isreal Englander are two other major billionaire shareholders of Devon.
1. Anadarko Petroleum Corporation (NYSE:APC) is the only energy company in which both billionaires and hedge funds collectively can agree on; they both have it number one. Nearly 20% of billionaires are invested in Anadarko, while it also had by far the largest ownership of any energy stock among all funds collectively, at 11.8%; that despite a steep drop from 16.2% ownership at the end of the third quarter, which landed it as the ninth most popular stock overall at the time. Anadarko shares have continued to slide since then, down over 15% since the start of the fourth quarter, but up 3.33% year-to-date. Ken Griffin, Paul Singer, and Adage Capital Management’s Phill Gross and Robert Atchinson are among the billionaire believers in Anadarko.