Continental Resources, Inc. (CLR), Carrizo Oil & Gas, Inc. (CRZO): Will OPEC Production Cuts Lead to Another Huge Quarter for GeoSphere Capital?

GeoSphere Capital Management is a New York-city based fund founded by Arvind Sanger in 2007. Its public equity portfolio’s value stands at $101.27 million as of June 30, up by $70 million quarter-over-quarter. In the third quarter, GeoSphere’s long positions in companies with market caps of at least $1 billion returned 13.93%. As the fund is heavily invested in energy stocks, we’ll take a look at its positions in four of those stocks in this article, Continental Resources, Inc. (NYSE:CLR), Carrizo Oil & Gas, Inc. (NASDAQ:CRZO), Cimarex Energy Co (NYSE:XEC), and WPX Energy Inc (NYSE:WPX).

Insider Monkey’s strategy to bet on hedge funds is unconventional. Instead of evaluating the overall performance of hedge funds, we focus on their long positions in companies which have a market cap of at least $1 billion. For example, in the third quarter, 627 hedge funds tracked by us had positive returns from the qualifying positions on the long side of their portfolios. After years of research, we concluded that hedged returns and losses from short positions tend to shrink hedge funds’ returns. So why not just focus on the area that is fruitful most of the time?

Now then, let’s analyze some of the top bets of GeoSphere Capital Management and see how they’ve performed.

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GeoSphere Capital Management upped its stake in oil and gas exploration company Continental Resources, Inc. (NYSE:CLR) by 36% during the second quarter, ending the period with a total of 120,000 shares of the company. The aggregate value of this investment was over $5.43 million on June 30. The stake paid off, as the stock returned 14.8% in the third quarter.


Continental Resources, Inc. (NYSE:CLR) investors should pay attention to a decrease in hedge fund interest recently. CLR was in 44 hedge funds’ portfolios at the end of the second quarter of 2016. There were 50 hedge funds in our database with CLR holdings at the end of the previous quarter. When looking at the institutional investors followed by Insider Monkey, John Labanowski’s Brenham Capital Management has the largest position in Continental Resources, Inc. (NYSE:CLR), worth close to $108.6 million. On Brenham Capital Management’s heels is Clint Carlson of Carlson Capital, with a $77.6 million position. Some other members of the smart money that hold long positions include Kevin D. Eng’s Columbus Hill Capital Management, Charles Clough’s Clough Capital Partners, and Robert Polak’s Anchor Bolt Capital.

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GeoSphere Capital Management increased its holding in Carrizo Oil & Gas, Inc. (NASDAQ:CRZO) by a monstrous 533% in the second quarter. The fund headed into the third quarter with 140,000 shares of the company, worth about $5.02 million on June 30. The move proved to be smart, as the stock returned 13.3% in the September quarter. Both of the aforementioned stocks have seen small declines in the fourth quarter however, as investors grow skeptical that OPEC will actually hammer out a deal to cut production.

Heading into the third quarter of 2016, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in Carrizo, a 14% gain from one quarter earlier. Mariko Gordon’s Daruma Asset Management has the number one position in Carrizo Oil & Gas, Inc. (NASDAQ:CRZO) among the funds in our system, worth close to $44.2 million. The second most bullish fund manager is Brenham Capital Management, with a $25.1 million position. Remaining members of the smart money that hold long positions consist of Carlson Capital, Gordy Holterman and Derek Dunn’s Overland Advisors, and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners.

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Cimarex Energy Co (NYSE:XEC) was another stock dear to GeoSphere (totally rhymes!), as the fund held 41,000 shares of the company valued at about $4.89 million on June 30, after upping its stake in the company by 438% during the June quarter. The stock returned 12.7% during the third quarter, making it another well-timed move for the fund.

Other money managers are also bullish on the stock, as the number of long hedge fund positions among those in our database went up by seven in the second quarter. The largest stake in Cimarex Energy Co (NYSE:XEC) was held by Diamond Hill Capital, which reported holding $418.5 million worth of stock as of the end of June. It was followed by Millennium Management with a $141.2 million position. Other investors bullish on the company included Point72 Asset Management, Discovery Capital Management, and Citadel Investment Group.

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GeoSphere Capital Management bought 135,000 shares of WPX Energy Inc (NYSE:WPX) in the second quarter, lifting its stake to 515,000 shares of the company on June 30, valued at $4.79 million. The fund also didn’t regret this move one bit, as the stock returned a massive 41.7% in the third quarter, while its year-to-date gains now stand at over 107%. WPX raised its oil production guidance for its 2016 fiscal year along with its third quarter results this morning.

At the end of the second quarter, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on WPX Energy, 33% more than at the end of the first quarter of 2016. Among these funds, Millennium Management held the most valuable stake in WPX Energy Inc (NYSE:WPX), which was worth $125.8 million at the end of the second quarter. On the second spot was Discovery Capital Management which amassed $81.3 million worth of shares. Moreover, Carlson Capital, D E Shaw, and Clough Capital Partners were also bullish on WPX Energy Inc (NYSE:WPX).

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Disclosure: None