Elite Hedge Funds Love These 10 Energy Stocks

Published September 16, 2022 at 9:55 am EDT Updated September 7, 2026 at 2:24 pm EDT

In this article, we are going to discuss the ten energy stocks that elite hedge funds currently admire the most.

Following the COVID-19 pandemic, the economic recovery has led to price increases across a range of commodities. Energy prices and supply-security worries have increased even more as a result of the situation in Ukraine. However, the shift to a lower-carbon energy system is continuing and accelerating, and it is likely that the energy landscape will change quickly over the next few decades. According to a report published by Mckinsey & Company in April 2022, it is predicted that global energy consumption will level off in the coming decades. Although the global economy is expanding quickly, and with a growth in the world’s population by two billion people, energy consumption is only expected to increase by 14%. By 2050, it is anticipated that the share of electricity in the total consumption mix will increase from 20% to 40%. Because of electrification and rising living standards, power consumption is predicted to triple by 2050. Renewables are expected to become the new baseload, accounting for 50% of the power mix by 2030 and 85% by 2050.

Despite a short-term recovery in liquids demand due to the effects of the COVID-19 pandemic, the global demand for liquids is predicted to reach its high in two to five years at roughly 102 MMb/d. Regionally, the demand for liquids has already peaked in the major oil markets of the US and the EU, and it is likely that all markets, including developing nations like India and Southeast Asia, will reach their peak before 2040. After peaking in the early 2020s, the demand for liquids in road transportation is predicted to fall by 75% by 2050 due to slower growth in the number of cars on the road, improved efficiency, and an increase in the uptake of electric vehicles (EVs), with bio- and synfuels further reducing demand for crude oil.

With a decreased supply due to unanticipated outages and underinvestment and higher demand due to a swift economic rebound and unforeseen weather circumstances, gas prices rose globally in 2021. Up until around 2035 to 2040, the gas demand for power is expected to increase significantly. After that, it is anticipated to increasingly serve as a backup for renewable energy sources. Power and decarbonization technologies are expected to increase at a 5% annual rate and reach over $1 trillion in value in 2050, starting from a relatively low EBIT base of about $300 billion today. Statista anticipates that primary energy consumption would be approximately 352 million barrels of oil equivalent per day by 2045. Oil and gas will continue to contribute the most energy, at 99 and 85.7 million barrels, respectively. As we move into 2022, many oil and gas companies are looking to reinvent themselves by practicing capital discipline, focusing on financial health, committing to climate change, and transforming business models. Keeping these motives in perspective, top players like Exxon Mobil Corporation (NYSE:XOM), Halliburton Company (NYSE:HAL), and Royal Dutch Shell plc (NYSE:RDS) have become the face of the industry.

Elite Hedge Funds Love These 10 Energy Stocks

Our Methodology

Insider Monkey’s research shows that the consensus stock picks of the top hedge funds can produce returns that beat the broader market’s performance by a wide margin, which is why we actively track the portfolios of 895 hedge funds. The stocks that were included in our list were chosen based on hedge funds’ popularity, fundamentals, analyst recommendations, and potential for future growth based on core business strengths.

10. PG&E Corporation (NYSE:PCG)

Number of Hedge Fund Holders as of Q2 2022: 51

A total of 51 hedge funds hold a stake in PG&E Corporation as of Q2, 2022. PCG was incorporated in 1905 and is headquartered in San Francisco, California. PG&E Corporation, through its subsidiary, Pacific Gas and Electric Company, engages in the sale and delivery of electricity and natural gas to customers in Northern and Central California in the United States. The stock has gained 9.76% in the past six months and 2.21% year to date. It does not currently pay a dividend. Mizuho Securities analyst Paul Fremont maintained a Buy rating on PG&E Corporation on August 17 and set a price target of $18. The company’s shares closed at $12.48 on August 26. Dan Loeb’s Third Point is the largest shareholder of PG&E Corporation, holding 65.4 million PCG shares valued at $653 million, comprising 15.4% of its portfolio.

In its Q1 2022 investor letter, Third Point Management mentioned PG&E Corporation and explained its insights for the company. Here is what the fund said:

“We continue to see immense value and potential in our position in Pacific Gas & Electric, which emerged from bankruptcy just two years ago. PG&E’s new CEO, Patti Poppe, has transformed the organization, creating a new leadership and safety culture around a talented, committed, and dynamic executive team that is rethinking the way the Company addresses the energy needs of Northern Californians. California is at the forefront of the new energy transition with aggressive renewable procurement goals and high electric vehicle adoption, yet the state faces escalating climate change risks due to extreme drought conditions and wildfires. These conditions present unique challenges to utilities operating in the state. Patti and her team have brought new and creative solutions to these challenges with her focus on a lean operating system and an ambitious undergrounding plan.

In April, PG&E Corporation reported a straightforward and uneventful set of a results, delivering on its promises to customers and investors. As investors, we celebrate that simplicity. At current prices, the Company trades at under 12x 2022 consensus earnings compared to the utility index average of 21x and below its closest California peer, Edison International, at 15x. While there is an overhang from shares to be monetized by the PG&E Fire Victim Trust, PG&E will benefit from the reinstatement of a cash dividend in 2023 and if, as hoped, it is included in the S&P 500 index. Over the next year, we think PG&E will Page 7 continue to re-rate towards industry averages while also growing earnings at an industry-leading 10% per year. In this type of market environment, the financial equation of consistent earnings growth and multiple re-rating makes for a wonderfully boring story and a solid anchor for our portfolio as Third Point’s largest position.”

09. EQT Corporation (NYSE:EQT)

Number of Hedge Fund Holders as of Q2 2022: 52

EQT Corporation (NYSE:EQT), a Pittsburgh, Pennsylvania-based energy corporation with a market capitalization of $18.3 billion, was established in 1888. Since the start of the year, EQT Corporation has delivered a massive 127.64% return to its shareholders. On August 26, 2022, the stock’s price per share reached $49.67. The company has a decent payout ratio of 17.28% and has declared a quarterly dividend of $0.15 per share to the shareholders with records as on August 8. The dividend is to be paid on September 1.

On August 18, Mizuho analyst Vincent Lovaglio raised his price target for EQT Corporation from $55 to $59 and maintains a Buy rating on the stock. After the Q2 numbers, the analyst claims his broader thesis for the exploration and production industry is still valid. According to Lovaglio in a research note, structural undersupply, driven by multi-year underinvestment, should continue to support higher than anticipated commodity prices and better than anticipated cash returns, making the group a reasonably decent bargain compared to the broader market.

ClearBridge Mid Cap Growth Strategy Fund mentioned EQT Corporation in its Q2 2022 investor letter. Here is what the fund said:

“We initiated a position in EQT (NYSE:EQT), the largest natural gas producer in the U.S., which possesses high-quality acreage within the Marcellus Shale basin. EQT has benefited from tight supply and demand dynamics as cleaner-burning natural gas takes global share from coal and exports to Europe and Asia provide an avenue of demand growth. Longer-term contracts enhance EQT’s earnings visibility as Europe eliminates its dependence on Russian gas.”

08. Diamondback Energy, Inc. (NASDAQ:FANG)

Number of Hedge Fund Holders as of Q2 2022: 54

Diamondback Energy, Inc. (NASDAQ:FANG) has just touched the peak of its popularity among the hedge funds tracked by Insider Monkey during Q2, 2022, as a total of 54 hedge funds are holding a stake in the company. On August 1, the company posted earnings per share of $7.93 and $2.77 billion in revenue, both above the market consensus. The stock has consistently beaten its EPS estimate for the past four quarters, with actual EPS jumping from $2.94 in Q3 2021 to $7.07 during the recent quarter. Diamondback Energy, Inc. has a payout ratio of 38.22%.

On August 18, Vincent Lovaglio of Mizuho lowered his price target for Diamondback Energy, Inc. to $203 from $224 while keeping a Buy rating on the shares. Just like Exxon Mobil Corporation, Halliburton Company, and Royal Dutch Shell plc (NYSE:RDS), Diamondback Energy, Inc. is one of the best energy stocks to buy, according to elite hedge funds.

07. Pioneer Natural Resources Company (NYSE:PXD)

Number of Hedge Fund Holders as of Q2 2022: 56

Pioneer Natural Resources Company (NYSE:PXD) is the largest Midland Basin (Texas) oil and gas firm paying out 80% of its free cash as a variable dividend. Due to the company’s extremely low manufacturing costs, it has been able to produce very high free cash flow in the current high-price environment. With a high payout ratio of 65.36%, its dividend has shown growth for the past four years and it has a five-year dividend growth rate of 101.99%. For Q2, 2022, it posted EPS of $9.30, beating estimates by $0.58, and actual revenue of $6.92 billion, beating estimates by $101.33 million. Pioneer Natural Resources Company was in 56 hedge fund portfolios at the end of the second quarter of 2022, compared to 54 funds in the previous quarter. Pioneer Natural Resources Company delivered a 43.85% return year to date.

Tudor Pickering analyst Matthew Portillo, however, downgraded Pioneer Natural Resources to Hold from Buy on August 19.

In its Q1 2022 investor letter, Carillon Scout Mid Cap Fund mentioned Pioneer Natural Resources Company. Here is what the fund said.

“Pioneer Natural Resources (NYSE:PXD) performed well in a strong energy sector. Pioneer stood out recently with a pledge to return a large majority of free cash flow to shareowners through dividends and stock buybacks, and ended hedging to give shareowners more earnings and dividend potential should oil and gas prices continue to rise.”

06. Devon Energy Corporation (NYSE:DVN)

Number of Hedge Fund Holders as of Q2 2022: 57

A total of 57 hedge funds are holding a stake in Devon Energy Corporation (NYSE:DVN) as of Q2, 2022, with Rajiv Jain’s GQG Partners holding the largest stake with 15 million shares. On August 1, Devon Energy Corporation reported a non-GAAP EPS for the second quarter of $2.59, above expectations by $0.22. The $5.63 billion in revenue increased 132.6% year over year and has beaten the Wall Street expectation by $880 million. Devon Energy Corporation stock price return shows a 60% gain year-to-date and a 157% increase over the past year.

In the range of 600,000 to 610,000 Boe per day, the business increased its production forecast for FY2022 by 3%. Similarly, it revised its upstream capital guidance, moving it from a previous range of $2.1 billion to $2.4 billion.

On August 23, Mizuho’s analyst Vincent Lovaglio boosted his price target from $88 to $91 for shares of Devon Energy Corporation. The analyst reiterated his rating to “Buy”. Just like Exxon Mobil Corporation, Halliburton Company, and Royal Dutch Shell plc (NYSE:RDS), Devon Energy Corporation is one of the best energy stocks to buy, according to elite hedge funds.

05. Antero Resources Corp (NYSE:AR)

Number of Hedge Fund Holders as of Q2 2022: 64

Hedge funds tracked by Insider Monkey have been bullish on Antero Resources Corp (NYSE:AR) shares since Q1, 2021. The number of hedge funds holding Antero Resources Corp shares increased gradually in the past four quarters touching its peak during the recent quarter with 64 hedge funds holding Antero Resources Corp shares. Zach Schreiber’s Point State Capital is the largest stakeholder holding 4.2 million shares of Antero Resources Corp valued at $130 million.

Antero Resources Corporation is a hydrocarbon exploration firm with all of its reserves located in the Appalachian Basin. Petrol, ethane, natural gas liquids, and natural gas are all present in the company’s reserves. As of August 29, the company shares had increased significantly over the previous 12 months by over 229%.

On July 27, Antero Resources Corporation released its Q2 2022 financial results. The business generated $563 million in non-GAAP net income. The company’s $2.2 billion in revenue was a 349.5% YoY increase, beating Wall Street expectations by $380 million. Additionally, non-GAAP FCF of $664 million and net cash produced by operating activities of $923 million were reported. The business bought back $247 million worth of stock and lowered its overall debt by $383 million.

04. Cheniere Energy, Inc. (NYSE:LNG)

Number of Hedge Fund Holders as of Q2 2022: 65

The number of hedge funds holding Cheniere Energy, Inc. (NYSE:LNG) shares have shown an upward trend over the past four quarters. A total of 65 hedge funds are holding a stake in Cheniere Energy, Inc. as compared to 62 in the previous quarter. Icahn Capital LP is the largest shareholder holding 5.6 million shares worth roughly $747 million.

Over the last twelve months, Cheniere Energy, Inc. finances significantly improved year over year. The substantial rise in natural gas prices that we observed was the main factor in this, while the company also experienced an increase in sales volumes. According to its latest quarter’s earnings results announced on August 4, the stock has EPS GAAP Actual of $2.90, missing the estimate by $0.50; however, with a revenue figure of $8.01 billion, it has beaten the estimates by $1.59 billion. As of August 29, the stock has produced a return of 26.23% in the past six months and 63.68% year to date.

On August 16, Cheniere Energy, Inc. price target was increased to $186 from $160 by Barclays analyst Marc Solecitto, who also maintained an Overweight rating on the stock. Theresa Chen and Solecitto believe that there are still distinct tailwinds in their coverage of the North American midstream and refining industries, and they believe that, barring a significant economic shock, the fundamentals of the U.S. refining industry will continue to perform strongly.

03. Occidental Petroleum Corporation (NYSE:OXY)

Number of Hedge Fund Holders as of Q2 2022: 66

Warren Buffett’s Berkshire Hathaway is the largest shareholder of Occidental Petroleum Corporation (NYSE:OXY), holding 159 million of its shares worth roughly $9,335 million, comprising 3.11% of its portfolio. Following the Federal Energy Regulatory Commission’s approval of Berkshire Hathaway’s application, which was submitted on July 11, to purchase up to 50% of Occidental Petroleum’s common stock through secondary market transactions, the company’s shares are rising. The stock has gained 13.42% during the past month. According to Berkshire, it presently owns about 18.72% of the outstanding common shares of Occidental and is requesting permission to purchase up to 50% of the company’s stock through secondary market transactions as part of the proposed transaction. The information fueled rumors that Berkshire might be preparing to acquire Occidental. However, Occidental hasn’t been notified of Buffett’s plans to buy majority ownership in the business, according to sources familiar with the situation.

On August 19, Warren Buffett’s Berkshire Hathaway received regulatory approval to purchase up to 50% of Occidental Petroleum.

Hedge funds’ popularity touched its peak during Q1, 2022, with 67 hedge funds holding a stake in Occidental Petroleum Corporation during the most recent quarter as compared to 66 in the previous quarter.

Smead Capital Management mentioned Occidental Petroleum Corporation in the Q2, 2022 investor letter. Here’s what the fund said:

“For the quarter, our best-performing stocks were Continental Resources (CLR), Merck (MRK) and Occidental Petroleum Corporation (NYSE:OXY). Despite a steep sell-off in June in the oil and gas stocks, two of our oil stocks made the quarterly list.

If you are wondering how we are outperforming the S&P 500 Index in the first half of the year, look no further than our top three performers. Occidental Petroleum (OXY), Continental Resources (CLR) and Conoco Phillips (COP) soared in value and were barely represented in the S&P 500 Index. To quote Jerry Jones, owner of the Dallas Cowboys, “We are in the first quarter on higher energy prices!”

02. Chesapeake Energy Corporation (NYSE:CHK)

Number of Hedge Fund Holders as of Q2 2022: 67

Chesapeake Energy Corporation (NYSE:CHK) has touched the peak of its popularity among hedge funds tracked by Insider Monkey during Q2 of 2022, with 67 hedge funds holding a stake as compared to 59 in the previous quarter. Oaktree Capital Management is the largest shareholder holding 10.5 million shares, valued at $852 million. On August 3, Chesapeake Energy Corporation CEO Dell’Osso revealed his plan to exit Eagle Ford shale in pivot to natural gas. The shale driller will focus solely on its gas-rich holdings in Marcellus and Haynesville basins. Following the news, the stock has gained 12.05% so far in the past month. On August 2, Chesapeake Energy Corporation posted GAAP actual earnings per share of $8.27 and $2.79 billion in revenue, both above the market consensus.

In its Q1 2022 investor letter, ClearBridge Investments Dividend Strategy mentioned Chesapeake Energy Corporation and explained its insights for the company. Here is what the fund said:

“In the early days of the invasion, we made two measured changes to the portfolio based on longer-term fallout we anticipate from Russia’s invasion of Ukraine. First, we initiated small positions in U.S. natural gas producers Chesapeake.

Given its superior environmental profile compared to other fossil fuels, we have long favored natural gas in our energy holdings. Combustion of natural gas releases 50% less CO2 than coal, 25% less CO2 than gasoline and dramatically less particulate and pollution, per the U.S. Energy Information Administration. With the advances in shale production this century, the U.S. has become a natural gas powerhouse with some of the lowest-cost and largest reserves in the world. But because natural gas is difficult to ship across the ocean (it must be liquefied, which requires expensive infrastructure on both ends of the voyage), America’s gas bounty has ironically proved a burden for U.S. producers.

The surplus of natural gas in North America has resulted in low prices and weak earnings for gas-focused producers. Exports, while growing, are restrained by the high cost of building export infrastructure. Europe, in a Faustian bargain, has relied on abundant, inexpensive Russian gas transported by pipeline.

Despite the abundance of low-cost resources and a superior environmental profile, the investment case for U.S. natural gas producers was previously unfavorable due to oversupply in the domestic market.

In the days preceding the invasion, we were quick to realize the war would change global energy flows. Europe is shifting away from Russia and toward new sources of imported liquified natural gas. We purchased our stakes in Chesapeake to capitalize on these trends. The recently announced energy pact between the U.S. and Europe represents an early positive datapoint in support of this investment thesis.”

01. Exxon Mobil Corporation (NYSE:XOM)

Number of Hedge Fund Holders as of Q2 2022: 72

During the previous quarter, Exxon Mobil Corporation reached the height of its popularity among hedge funds, with 83 hedge funds holding shares of Exxon Mobil Corporation as opposed to 72 during the most recent quarter. Rajiv Jain’s GQG Partners is the largest shareholder of Exxon Mobil Corporation, holding 47.497 million of its shares worth roughly $4,069.597 million. The stock has gained 24.80% in the past six months and 54.03% year to date. On July 29, the company posted GAAP actual earnings per share of $4.21 and $115.68 billion in revenue, both above the market consensus. On August 10, Credit Suisse analyst William Janela assumed coverage of Exxon Mobil Corporation with an Outperform rating and an unchanged price target of $125.

Here is what Saturna Capital Amana Funds has to say about Exxon Mobil Corporation in its Q4 2021 investor letter:

“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon, which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”

You can also take a look at 10 Undervalued Canadian Stocks to Buy Now and Best Defensive Stocks Under $50.

Follow Insider Monkey on Twitter