Lucas Capital Management Bets Big on Energy in Q4

In the most recent 13F filing, Russell Lucas Lucas Capital Management revealed that over 50% of its equity portfolio was invested in the energy sector. The New Jersey-based Lucas Capital focuses on the energy markets, specifically in North American oil and gas opportunities. It has about $730 million in assets under management. The value of Lucas Capital’s stood at around $172.5 million at the end of September. In this article, we will take a look at the fund’s top holdings, in term of value for the third quarter.

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#5 Johnson & Johnson (NYSE:JNJ)

Shares held (as of September 30): 51,075

Total Value (as of September 30): $4.8 million

Percent of Portfolio (as of September 30): 2.76%

Lucas Capital inched up its position in Johnson & Johnson (NYSE:JNJ) by 1% during the quarter. Johnson & Johnson has recently entered into an agreement to acquire Novira Therapeutics, which is engaged in developing novel therapies for curative treatment of chronic hepatitis B virus (HBV) infection. The deal is expected to close during the fourth quarter. Johnson & Johnson (NYSE:JNJ)’s earnings for the third quarter declined to $3.4 billion, compared to $4.74 billion in a year-ago period. Shares of Johnson & Johnson (NYSE:JNJ) have declined by 3.49% year-to-date. Another investor that sees value in Johnson & Johnson is Ken Fisher’s Fisher Asset Management, which held 10.69 million shares as of the end of September.

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#4 B&G Foods Inc. (NYSE:BGS)

Shares held (as of September 30): 143,567

Total Value (as of September 30): $5.2 million

Percent of Portfolio (as of September 30): 3.03%

Lucas Capital’s stake in B&G Foods Inc. (NYSE:BGS) was reduced by 8% during the third quarter. B&G Foods is a $2.08-billion market cap company engaged in selling a diversified portfolio of branded shelf-stable foods across the United States, Canada and Puerto Rico. The company’s stock is up over 20% year-to-date. Recently, B&G Foods Inc. (NYSE:BGS) has acquired the Green Giant and Le Sueur brands from General Mills, Inc. (NYSE:GIS) for $765 million in cash plus an inventory adjustment at closing of about $58 million. B&G Foods Inc. (NYSE:BGS) turned to a profit for the third quarter, as the company reported income of $19.8 million, or $0.34 per share, compared to a loss of $4.4 million, or $0.08 per share a year earlier. B&G Foods was also a favorite stock of Ric Dillon’s Diamond Hill Capital, which owned 1.88 million shares of the company at the end of June.

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On the next page, we will discuss the top three picks of Lucas Capital Management, namely, Dorchester Minerals LP (NASDAQ:DMLP), Apple Inc. (NASDAQ:AAPL), and Sabine Royalty Trust (NYSE:SBR).

#3 Dorchester Minerals LP (NASDAQ:DMLP)

Shares held (as of September 30): 437,447

Total Value (as of September 30): $6.33 million

Percent of Portfolio (as of September 30): 3.67%

Lucas Capital slightly upped its position in Dorchester Minerals LP (NASDAQ:DMLP), which owns producing and non-producing crude oil and natural gas mineral, royalty, overriding royalty, net profits, and leasehold interests. For the quarter ended September 30, Dorchester Minerals LP (NASDAQ:DMLP)’s income significantly dropped to $2.68 million, compared to $10.97 million in a year-ago quarter. Revenue for the quarter decreased to $7.39 million, versus $15.72 million in 2014. This seems to have had an impact on Dorchester Minerals LP (NASDAQ:DMLP)’s stock, which lost by 42.81% year-to-date. David Atterbury’s Whetstone Capital Advisors held 101,440 Dorchester Minerals shares at the end of the second quarter.

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#2 Apple Inc. (NASDAQ:AAPL)

Shares held (as of September 30): 67,667

Total Value (as of September 30): $7.46 million

Percent of Portfolio (as of September 30): 4.33%

Lucas Capital trimmed its stake in Apple Inc. (NASDAQ:AAPL) from 64,746 shares during the quarter. As a result of higher iPhone sales, Apple Inc. (NASDAQ:AAPL)’s revenue increased to $51.5 billion last quarter, compared to $42.1 billion in a year-ago quarter. The company reported a profit of $11.1 billion, or $1.96 per diluted share, versus $8.5 billion, or $1.42 per diluted share a year earlier. Shares of Apple Inc. (NASDAQ:AAPL) have increased by 5.27% year-to-date. Apple is a long-term bet of Carl Icahn’s Icahn Capital LP, which held 52.76 million shares of the company as of the end of June.

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#1 Sabine Royalty Trust (NYSE:SBR)

Shares held (as of September 30): 270,256

Total Value (as of September 30): $8.26 million

Percent of Portfolio (as of September 30): 4.79%

With a market cap of $465.38 million, Sabine Royalty Trust (NYSE:SBR) is a Texas-based express trust energy, whose trustee is Southwest Bank. The trust owns nearly 5,400 tracts of land in Florida, Louisiana, Texas, Mississippi, Oklahoma, and New Mexico. At the end of the second quarter, Sabine Royalty Trust (NYSE:SBR) reported income of $9.48 million, compared to $15.73 million in a year-ago quarter. The company’s stock declined by 10.84% year-to-date. Another investor that loves Sabine Royalty Trust (NYSE:SBR) is Ken Griffin’s Citadel Investment Group, which held 25,242 shares at the end of June.

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Disclosure: none