Hedge Funds Like These 5 Cheap Energy Stocks

#4 Southwestern Energy Company (NYSE:SWN)

– Hedge Funds with Long Positions (as of December 31): 32

– Value of Hedge Funds’ Holdings (as of December 31): $468.82 Million

The hedge fund sentiment towards Southwestern Energy Company (NYSE:SWN) declined significantly in the fourth quarter of 2015, as the number of money managers with stakes in the company dropped to 32 from 38 quarter-over-quarter. Similarly, the value of those funds’ stakes decreased to $468.82 million from $569.33 million quarter-over-quarter. Southwestern Energy Company is an independent natural gas and oil company with operations primarily in the Appalachian Basin and Fayetteville Shale. Just recently, Fitch Investor Services cut its credit rating on the oil and gas producer to non-investment grade B+ from BBB-, while Moody’s cut its rating on the company to B1 from Baa3. These credit ratings cuts seem to reflect the company’s December 2014 acquisition of certain oil and natural gas assets in Southwest Appalachia from Chesapeake Energy Corporation, which weakened its balance sheet. Another reason for concern over the company’s future is that Southwestern’s 2016 planned capital investments are significantly lower relative to 2015, which will most likely have a negative impact on production. Earlier this month, analysts at Barclays downgraded Southwestern Energy to ‘Underweight’ from ‘Equal Weight’ and cut their price target on the stock to $4 from $7, citing low energy prices and the company’s levered balance sheet. Let’s not forget to mention that the shares of Southwestern Energy are up by 13% year-to-date. Andreas Halvorsen’s Viking Global acquired a new stake of 11.67 million shares in Southwestern Energy Company (NYSE:SWN) during the December quarter.

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#3 Chesapeake Energy Corporation (NYSE:CHK)

– Hedge Funds with Long Positions (as of December 31): 32

– Value of Hedge Funds’ Holdings (as of December 31): $716.44 Million

There were 32 hedge funds monitored by Insider Monkey with long positions in Chesapeake Energy Corporation (NYSE:CHK) at the end of December 2015, compared to 34 registered at the end of the previous quarter. What’s more, the value of those positions shrank to a mere $716.44 million from $1.21 billion quarter-over-quarter. Those 32 funds invested in Chesapeake held nearly 24% of the company’s outstanding shares on December 31. The second-largest producer of natural gas and the 14th-largest producer of oil and natural gas liquids (NGL) in the United States has seen its stock advance by 6% since the beginning of 2016. The struggling oil and gas company has implemented a series of actions to improve its liquidity in the past year or so, including the elimination of quarterly cash dividend payments on its common stock and the suspension of dividend payments on convertible preferred stock. In December 2015, Chesapeake Energy completed private exchanges of roughly $3.9 billion in long-term debt for approximately $2.4 billion of newly-issued 8.00% Senior Secured Second Lien Notes due 2022. According to a fresh report by Reuters, the company is currently considering exchanging a portion of its existing debt for new 1.5-lien debt. At the end of December 2015, Chesapeake had roughly $9.71 billion of long-term debt outstanding, of which $381 million matures in March. Carl Icahn’s Icahn Capital LP owns 73.05 million shares of Chesapeake Energy Corporation (NYSE:CHK) as of December 31.

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