Kyle Bass’ Revamped Portfolio Shows Bets On These Small-Cap Energy Stocks

The next step small-cap energy pick made by Bass during the first quarter was in Oasis Petroleum Inc. (NYSE:OAS), in which he took a stake of 54,453 shares with a value of $774,000. Houston-based Oasis Petroleum has been having a better spring than Bonanza, returning 3.8% year-to-date and an impressive 24.2% over the past three months, taking advantage of a recovering oil price. The results for the first quarter did however reveal a low return-on-equity and diminishing operating cash flow. Seemingly, the shares reacted positively to rising oil prices, so high volatility in the stock is likely to continue. Despite the volatility, Oasis Petroleum Inc. (NYSE:OAS) attracted a number of hedge fund investors to it during the first quarter. Among those we find Lyan Street Capital, which increased its stake by 7,657% to 1.16 million shares, Think Investments which opened a stake of 1.30 million shares and John Scully‘s SPO Advisory Corp, which increased its holding by 164% to 20.37 million shares.

The last small-cap oil pick of Bass we’ll look at is Matador Resources Co (NYSE:MTDR). Bass took a stake in the Dallas-based Matador Resources consisting of 29,591 shares valued at $649,000. Things have steadily improved among Bass’ picks, as Matador Resources has returned a stellar 36.7% year-to-date. Matador, also affected by the declining oil prices has however managed to execute some cost reductions which investors have reacted positively to during the spring. On the financial side, Matador, which published its earnings for the first quarter in the beginning of May, presented a debt-to-equity ratio of 0.39, growing revenue, an increased net operating cash flow and a high gross profit margin. The earnings per share were $0.01 which was in line with analysts’ estimates. Moreover, analysts like Matador, having set a consensus “Buy” recommendation and target price on the stock ranging between $33.00 and $36.00, indicating potential upside of another 33%, which is mostly explained by the company’s strong financial situation and recovering oil prices. Another investor that is bullish on Matador Resources Co (NYSE:MTDR) is Bodri Capital Management, which took a stake in Matador during the first quarter of 40,000 shares, while quant fund D E Shaw also jumped on the train with a stake of 170,556 shares.

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