L1 Capital, an investment management company, released its “L1 Long Short Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. The fund outperformed the S&P ASX200 AI benchmark and returned -10.4% (net) in the second quarter. Global markets fell sharply over concerns of recession during the quarter. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
L1 Capital discussed stocks like Cenovus Energy Inc. (NYSE:CVE) in the second quarter investor letter. Headquartered in Calgary, Canada, Cenovus Energy Inc. (NYSE:CVE) is an energy company, that produces, develops, and markets natural gas, crude oil, and natural gas liquids. On September 20, 2022, Cenovus Energy Inc. (NYSE:CVE) stock closed at $18.35 per share. One-month return of Cenovus Energy Inc. (NYSE:CVE) was -5.80%, and its shares gained 101.21% of their value over the last 52 weeks. Cenovus Energy Inc. (NYSE:CVE) has a market capitalization of $35.807 billion.
Here is what L1 Capital specifically said about Cenovus Energy Inc. (NYSE:CVE) in its Q2 2022 investor letter:
“MEG Energy and Cenovus Energy Inc. (NYSE:CVE): We continue to remain positive on the outlook for Energy. While a potential U.S. recession would result in softer oil demand, we believe this would be more than outweighed by China re-opening over the coming year (which would see a major lift in car and air traffic). Oil supply continues to remain constrained with sustained declines in global inventories and OPEC+ remains unable to grow production significantly. With the sell-off in energy stocks, MEG and Cenovus are currently generating more than 20% of their market cap in cash flow with large dividends and share buybacks to come.
Cenovus Energy (Long +14%) shares rallied driven by continued strong free cash flow generation, as well as being positioned to benefit from strong refining margins and downstream operations. The company recently announced a significant increase in dividends, which gives us greater confidence on the potential for a 100% return of free cash flow generation via dividends and buybacks from early CY23. Given the long-life nature of its oil sand assets and its low cost of production, we estimate the company is free cash flow break-even at an oil price of ~US$40/bbl. At present, oil prices are more than double this break-even point, implying considerable upside to consensus cash flow estimates (if prices remain near current levels). There are also additional value realisation catalysts with the company continuing to progress the de-gearing of its balance sheet via organic cash generation and asset sales.”
Cenovus Energy Inc. (NYSE:CVE) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held Cenovus Energy Inc. (NYSE:CVE) at the end of the second quarter which was 44 in the previous quarter.
We discussed Cenovus Energy Inc. (NYSE:CVE) in another article and shared the list of best-performing energy stocks for 2022. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.
Disclosure: None. This article is originally published at Insider Monkey.