Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Billionaire Ken Griffin’s Citadel Owns Almost 5% of Carrizo Oil & Gas, Inc. (CRZO)

Citadel Investment Group, which is managed by billionaire Ken Griffin and his team, has filed a 13G with the SEC to disclose a position of 1.9 million shares in Carrizo Oil & Gas, Inc. (NASDAQ:CRZO), a $1 billion market cap exploration and production company focused on shale plays including the Eagle Ford, Niobrara, and Utica. We track quarterly 13F filings from Citadel and other hedge funds, which we primarily use to develop investing strategies (we have found, for example, that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year), and so we can see that the fund had only owned about 15,000 shares at the beginning of this year. So Citadel has built essentially this entire position in the last few months. Find Griffin’s favorite stocks from the 13F. In fact, none of the funds or other notable investors which we track owned at least 300,000 shares of the stock at the end of December.

Carrizo Oil & Gas, Inc. (NASDAQ:CRZO)’s oil and gas revenue came close to doubling last year compared to 2011. The company benefitted from a large increase in oil production volumes; between this and lower natural gas prices, nearly 80% of revenue came from oil. Currently, the spread between oil and gas prices is quite wide due to high supply capacity in the natural gas market. While Carrizo Oil & Gas, Inc. (NASDAQ:CRZO) also ran up high costs, its earnings grew by 51% for the year and it finished the year with $1.39 in EPS (including 11 cents per share in earnings from discontinued operations). Of course we don’t expect future growth to be quite that high, though the business will likely increase production further and there is at least some potential upside in the event of higher nat gas prices.

CITADEL INVESTMENT GROUPCurrently the stock trades at 18 times trailing earnings- higher than where we find the oil majors, though of course Carrizo Oil & Gas, Inc. (NASDAQ:CRZO) has better growth opportunities. Wall Street analysts expect high growth- as they do at other shale-focused E&P companies- with consensus earnings per share for 2014 coming in at $2.66. That results in a forward P/E of 10, and the sell-side expects further improvements from that point with the result being a five-year PEG ratio of 0.4. However, the market has been more pessimistic: the stock is down 11% in the last year, and currently 18% of the float is held short per the most recent data.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.