Both small- and large-scale investors continue to seek bargains in the energy industry, as energy stocks have plummeted significantly over the past year or so due to depressed crude oil prices. There is mounting evidence that the crude oil market is in a bottoming out phase at the moment, but it is hard to stipulate when the industry will embark on a real turnaround. In fact, short sellers are shorting energy stocks at an extremely high rate at the moment, which almost equals the rate of short interest bank stocks were experiencing during the recent financial crisis. Short interest in energy stocks reached the third-highest level of any sector since 2007. Nonetheless, bargain-hunting investors could pinpoint bountiful investment opportunities in the energy sector, which will definitely embark on a turnaround sooner or later. For that reason, the Insider Monkey team decided to take a look at the most loved energy stocks among hedge funds as of the end of the fourth quarter of 2015. It is highly likely that this list of five most loved energy stocks comprises companies with strong balance sheets and strong liquidity, so let’s take a look at these allegedly five high-potential energy stocks.
While there are many metrics that investors can assess in the investment process, hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).
5. Halliburton Company (NYSE:HAL)
– Investors with Long Positions (as of December 31): 53
– Aggregate Value of Investors’ Holdings (as of December 31): $2.56 Billion
The number of hedge funds tracked by Insider Monkey with positions in Halliburton Company (NYSE:HAL) dropped to 53 from 59 during the final quarter of 2015, while the value of those positions shrank to $2.56 billion from $3.77 billion quarter-on-quarter. These 53 funds accumulated nearly 9% of the company’s outstanding common stock on December 31. The shares of the provider of services and products to the upstream oil and natural gas industry are down 3% year-to-date. Just several days ago, the diversified energy services company announced a headcount reduction of 5,000 employees, which accounts for 8% of its global workforce. The company cut its global headcount by roughly 25% during 2015 in an attempt to reduce its cost structure to tackle the worsening market conditions. Halliburton generated $23.6 billion in revenues during 2015, which marked a decrease of 28% year-on-year. More importantly, its revenue in North America declined by 39% year-over-year. Andreas Halvorsen’s Viking Global acquired a new stake of 6.67 million shares in Halliburton Company (NYSE:HAL) during the December quarter.