Citadel Investment Group, a hedge fund managed by billionaire Ken Griffin, has reported ownership of 1.5 million shares of PDC Energy (NASDAQ:PDCE) in a filing with the SEC. In Citadel’s 13F for the fourth quarter of 2012, the fund had disclosed that it owned about 360,000 shares and a small number of both call and put options at the end of December (find more stocks Citadel owned); therefore, we can conclude that Griffin and his team have bought most of their shares over the course of 2013. PDC Energy (NASDAQ:PDCE), a $1.5 billion market cap natural gas and oil exploration and production company, is up 44% year to date.
Product sales were off slightly last year compared to 2011. While production of natural gas, natural gas liquids, and crude oil all increased, this was offset by lower prices for the natural gas substances. While natural gas was responsible for the majority of energy equivalent production, crude oil sales made up 65% of revenue due to the spread between oil and natural gas prices. With production rising and revenue falling, pretax income came in negative even after adding back impairment charges; it had been positive in the previous year.
We’d noted that even though crude oil is currently responsible for most of PDC Energy (NASDAQ:PDCE)’s revenue, the majority of production is natural gas. This means that the company does have potential upside if the natural gas market recovers (of course, the same is also true of other natural gas producers); higher prices would essentially drop directly to the bottom line. Analyst expectations for 2014, however, imply a high forward earnings multiple of 28. The most recent data shows that 32% of the outstanding shares are held short.
Our database of 13F filings from hedge funds and other notable investors, which we use to develop investing strategies (we have found, for example, that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year), can also be used to see which funds like PDC Energy (NASDAQ:PDCE). Point State Capital, founded by Sean Cullinan and a number of other former portfolio managers at billionaire Stanley Druckenmiller’s Duquesne Capital, initiated a position of 1.1 million shares in PDC Energy (NASDAQ:PDCE) during the fourth quarter of 2012 (see Point State’s stock picks). Phil Gross and Robert Atchinson’s Adage Capital Management increased its own stake by 80% between October to a total of over 900,000 shares (check out Adage’s favorite stocks).