Here’s Why APA Corp. (APA) Shares Pressured in Q2

Hotchkis & Wiley, an investment management company, released its “Hotchkis & Wiley Large Cap Disciplined Value Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The S&P 500 rose 10.9% in Q2 2025, despite recent volatility. After the “liberation day” tariff announcement on April 2, the index plunged over 12% in four days. The market rebounded from this low, nearly +25% over the next ~11 weeks, to finish the quarter at an all-time high. In this environment, the fund performed in line with the Russell 1000 Value Index and returned 3.37% vs. 3.79% for the index. Please review the fund’s top 5 holdings to gain insight into their key selections for 2025.

In its second-quarter 2025 investor letter, Hotchkis & Wiley Large Cap Disciplined Value Fund highlighted stocks such as APA Corporation (NASDAQ:APA). APA Corporation (NASDAQ:APA) engages in oil and natural gas exploration, development, and production. The one-month return of APA Corporation (NASDAQ:APA) was 0.97%, and its shares lost 36.90% of their value over the last 52 weeks. On July 29, 2025, APA Corporation (NASDAQ:APA) stock closed at $19.68 per share, with a market capitalization of $7.101 billion.

Hotchkis & Wiley Large Cap Disciplined Value Fund stated the following regarding APA Corporation (NASDAQ:APA) in its second quarter 2025 investor letter:

“APA Corporation (NASDAQ:APA) is an independent exploration and production (E&P) operating offshore in Midland and Delaware basins in the Permian and onshore Egypt. The company has lucrative financial contracts that allow it to generate significant free cash flow (FCF) from differentials in natural gas prices. Investing in this company provides exposure to an energy market that was underearning versus normal levels of profitability and is currently generating significant FCF in what could be a perennially undersupplied market. Stock performance continued to be pressured throughout the quarter, driven by worries surrounding the Organization of the Petroleum Exporting Countries+ (OPEC+) barrels returning to the market, coupled with slowing demand. We believe that APA is misunderstood as investors are focusing on relatively shorter resource life in the Permian without factoring reinvestment opportunities in Suriname, Egypt, and potentially Alaska.”

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APA Corporation (NASDAQ:APA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held APA Corporation (NASDAQ:APA) at the end of the first quarter, compared to 34 in the previous quarter. While we acknowledge the risk and potential of APA Corporation (NASDAQ:APA) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than APA Corporation (NASDAQ:APA) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered APA Corporation (NASDAQ:APA) and shared Ariel Focus Fund’s views on the company. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.