Exxon Mobil (XOM), Chevron (CVX), Pioneer (PXD): Hedge Funds’ Favorite Energy Stocks

After swooning in early-August, energy stocks are building up steam again as crude oil prices rebound. Brent prices have jumped by 10% over the past two weeks, pushing the Vanguard Energy ETF (NYSEARCA:VDE) up by over 4% since August 15. Crude exports from Iran are expected to tumble by as much as 1 million barrels per day from their April highs owing to U.S sanctions, which will further tighten the international market.

Amid that backdrop, we’ve compiled a list of the energy stocks that hedge funds are the most bullish on as of the latest 13F reporting period, which fell on August 14. Among the top energy stocks are Chevron Corporation (NYSE:CVX), Anadarko Petroleum Corporation (NYSE:APC), Exxon Mobil Corporation (NYSE:XOM), Pioneer Natural Resources Company (NYSE:PXD), and Marathon Petroleum Corp (NYSE:MPC). We’ll see what hedge funds think of these stocks below.

Insider Monkey’s flagship “Best Performing Hedge Funds Strategy” has returned 107.5% since its May 2014 inception, crushing the S&P 500 by over 40 percentage points during that time. Energy stocks featured prominently among the 13 stock picks that were issued to our subscribers on February 15 of this year, including RSP Permian Inc (NYSE:RSPP), which gained 33% over the following three months.

Check out a detailed analysis of Insider Monkey’s past performance and quarterly stock picks for all the details.

Anadarko Petroleum Corporation (NYSE:APC)

Number of Hedge Fund Shareholders of APC (as of June 30): 48

Value of Hedge Funds’ Holdings in APC (as of June 30): $2.42 billion

Anadarko Petroleum Corporation (NYSE:APC) kicks off our list, with 48 of the hedge funds tracked by Insider Monkey owning shares of the company on June 30. Harris Associates, managed by Natixis Global Asset Management, remains Anadarko’s top shareholder with 9.01 million shares, up slightly from a quarter earlier. D E Shaw, founded by David E. Shaw (6.42 million shares), and Phill Gross and Robert Atchinson’s Adage Capital Management (5.71 million shares) remained the second- and third-largest shareholders in our database.

Anadarko Petroleum Corporation (NYSE:APC) grew its revenue to $3.29 billion in the second-quarter, a jump from $2.72 billion a year earlier. Robust oil sales of $2.26 billion helped offset a decline in natural gas sales, which fell to $203 million, a 36% year-over-year decline. Anadarko is preparing to go ahead with a massive LNG project in Mozambique that could achieve annual capacity of as much as 50 million tons. The company has lined up enough prospective customers to make the project viable and will now seek out the $20 billion in funding needed to turn it into a reality.

Exxon Mobil Corporation (NYSE:XOM)

Number of Hedge Fund Shareholders of XOM (as of June 30): 50

Value of Hedge Funds’ Holdings in XOM (as of June 30): $2.22 billion

Exxon Mobil Corporation (NYSE:XOM) was the only energy stock on this list to see a decrease in hedge fund ownership during the second-quarter, falling to 50 from 57 during the period. That dropped it from being the most popular energy stock at the end of March into a tie for third with Chevron. Among the funds that sold off Exxon Mobil during Q2 were Jim Simons‘ Renaissance Technologies, Steve Cohen’s Point72 Asset Management, and John Overdeck and David Siegel’s Two Sigma Advisors.

Exxon Mobil Corporation (NYSE:XOM) shares have slid by 6% in 2018 despite a strong rise in crude prices. Exxon’s Q2 earnings widely missed estimates, coming in at just $0.92 compared to the $1.27 consensus. Upstream earnings surged by 157% year-over-year to $3 billion, though downstream and chemicals earnings suffered year-over-year declines of 48% and 10% respectively. Oil-equivalent production and natural gas production declined by 7% and 10% respectively in the second-quarter compared to the same quarter of 2017.

On the next page we’ll look at the three energy stocks that power more hedge funds’ portfolios than any others.

Chevron Corporation (NYSE:CVX)

Number of Hedge Fund Shareholders of CVX (as of June 30): 50

Value of Hedge Funds’ Holdings in CVX (as of June 30): $2.40 billion

Chevron Corporation (NYSE:CVX) ranks third in hedge fund ownership as of June 30 after failing to rank among the top-5 on March 31. Hedge fund ownership jumped by five to 50 during the second-quarter, lead by Zach Schreiber’s Point State Capital, which opened a 1.65 million-share position during the quarter. Jorge Paulo Lemann‘s 3G Capital was another prominent fund that opened a Chevron position in Q2, which consisted of 300,000 shares.

Chevron Corporation (NYSE:CVX) recently asserted that it should land within the upper-range of its fiscal year 2018 production guidance thanks to strong second-half growth drivers, including the launch of a second production unit at its massive LNG project in Australia. Chevron is also ramping up production in the lucrative Permian Basis, where it controls more than 1.5 million acres and currently operates 19 rigs. Chevron expects to raise its gas output by 7% in 2018.

Pioneer Natural Resources Company (NYSE:PXD)

Number of Hedge Fund Shareholders of PXD (as of June 30): 57

Value of Hedge Funds’ Holdings in PXD (as of June 30): $2.42 billion

Pioneer Natural Resources Company (NYSE:PXD) ranks second on our list of hedge funds’ favorite energy stocks, with the number of hedge fund shareholders jumping to 57 from 48 during the second-quarter. Seth Klarman’s Baupost Group remained the biggest Pioneer bull in our system, owning 4 million shares, while Jacob Doft’s Highline Capital Management (617,840 shares) and John Labanowski’s Brenham Capital Management (460,000 shares) were among the funds to open new stakes in the stock.

Pioneer Natural Resources Company (NYSE:PXD) is another E&P company with a stake in the Permian, where it produced 272,000 boe/d in the second-quarter, precisely in the middle of the company’s guidance range. That also accounted for the majority of Pioneer’s overall daily average production of 328,000. Pioneer plans to transition into a Permian pure-play in the future, one which will produce as much as 1 million boe/d from the region.

Marathon Petroleum Corp (NYSE:MPC)

Number of Hedge Fund Shareholders of MPC (as of June 30): 59

Value of Hedge Funds’ Holdings in MPC (as of June 30): $3.24 billion

Marathon Petroleum Corp (NYSE:MPC) was the most popular stock among hedge funds as of June 30, both in terms of overall ownership and second-quarter activity, which saw a net total of 16 hedge funds pile into the stock. Aaron Cowen’s Suvretta Capital Management (2.58 million shares), Jonathan Barrett and Paul Segal’s Luminus Management (859,137 shares), and Howard Guberman’s Gruss Asset Management (850,000 shares) were among the many funds to open new Marathon Petroleum positions during the quarter.

Marathon Petroleum Corp (NYSE:MPC) has enjoyed 18% gains in 2018, outpacing many of its rivals. Despite the gains, Marathon still has an attractive enterprise multiple (EV/EBITDA) of just 7.5. Marathon’s leverage has also been cut back to just over 1x after soaring above 2.5x in 2016. Marathon recently raised its 2018 production guidance to between 400,000 and 415,000 boe/d even after factoring in the sale of non-core assets that contributed 5,000 boe/d in the first-half of 2018.

Disclosure: None