One of the key principles of smart investing is diversification. The majority of funds that we track have largely-diversified equity portfolios with at least 10-15 positions and at most…well, this number can go to as high as hundreds or even thousands of companies. However, we are talking about great hedge funds with hundreds of millions in assets, which allows them to take some risks and even obtain smaller returns from large-cap stocks, which in exchange promise a smaller risk. For these reasons, mimicking the stock picks of big investors who managed to make billions worth of fortune from investing activity is not a particularly good strategy for small investors. For example, Greenlight Capital, which manages around $7.50 billion in equity posted returns of around 19% per year since its inception, which is definitely not good enough if your goal is to get rich and you only have at most $1.0 million to invest.
Nevertheless, following the activity of billionaires that we track can still provide a lot of useful insights. As we follow their stock picks disclosed in quarterly 13F filings, we compile the data and identify stocks that are the most popular among hedge funds that we follow, and in particular, popular among billionaires. In this article we will look into five energy stocks that are the most popular among billionaires, according to the latest round of 13F filings for the end of fourth quarter of 2014. The majority of these companies are engaged in Exploration and Production of Oil & Gas, like Anadarko Petroleum Corporation (NYSE:APC), but there are also integrated Oil & Gas Companies like Petrobras, or suppliers of equipment related to the Oil & Gas industry.
We are looking into the energy sector because it is a particularly important subject that has made headlines over the last couple of months. With oil prices falling by 44% over the last year, investors and analysts are wondering how this has affected energy companies and what does the future have in store for them. Drilling stocks fell by 45% over the last year, while E&P and Equipment companies lost 15% and 13% respectively. In this way some investors have considered that oil prices might rebound and they may be able to profit from the opportunity to get into energy stocks while they are cheap, while others have moved out of them in order to minimize short and medium-term risk and seek opportunities elsewhere.
In this way, Anadarko Petroleum Corporation (NYSE:APC) was the favorite energy stock among billionaires, with 11 funds holding long positions with a total value of around $1.63 billion. On the other hand, the overview of the whole data shows that among some 730 funds that we track, Anadarko, an exploration and production company, lost a significant amount of popularity, as the number of funds holding the stock fell to 87 from 110, while the aggregate value of their positions declined to some $5.61 billion, from $9.12 billion in the previous quarter. However, some billionaires have still been bullish on Anadarko Petroleum Corporation (NYSE:APC) during the last quarter of 2014. Ken Griffin of Citadel Advisors and Paul Singer of Elliott Management, have raised their stakes by 35% and 24% over the quarter, to 4.92 million shares and 4.62 million shares respectively. Anadarko Petroleum Corporation (NYSE:APC) is one of the few E&P stocks that managed to post positive returns over the last 52 weeks and even though it returned only around 4%, it was still significantly above the industry average.