Mariner Investment Group LLC is a New York-based hedge fund vehicle founded by William J. Michaelcheck in 1992. Mariner and its affiliates advise single and multi-strategy hedge funds and funds of funds, as well as provide other alternative investment products and services. In late-June, Basil C. Williams stepped down from his position as co-chief investment officer of the alternative investment firm due to failed negotiations to renew his contract, so Mr. Michaelcheck became the sole CIO. The firm is a subsidiary of publicly-owned, Tokyo-based global financial services company ORIX Corporation, which owns a non-controlling majority ownership stake in Mariner Investment Group, with the hedge fund’s current and former principals owning a substantial minority interest.
Having briefly described the history of Mariner Investment Group, let’s discuss the hedge fund’s bullish stance towards the energy sector during the second quarter. The New York-based asset manager made a number of energy-related additions to its portfolio during the period, as well as boosted several existing energy-related positions. Mr. Michaelcheck’s investment firm oversees a $296.04 million portfolio as of the end of the second quarter, with energy investments accounting for 14% of the portfolio’s value. With that in mind, let’s see which energy stocks Mariner Investment was buying in the second quarter.
At Insider Monkey, we track around 765 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details).
Antero Resources Corp (NYSE:AR)
– Shares Owned by Mariner Investment Group (as of June 30): 83,400
– Value of Mariner Investment Group’s Holding (as of June 30): $2.17 Million
Mariner Investment Group LLC acquired a new stake of 83,400 shares of Antero Resources Corp (NYSE:AR) during the second quarter of 2016, which was valued at $2.17 million on June 30. The shares of the independent oil and natural gas company are up by 24% since the beginning of 2016. The company’s drilling opportunities are focused in the Marcellus Shale and Utica Shale of the Appalachian Basin. In early-June, Antero Resources agreed to acquire roughly 55,000 net acres on the core of the Marcellus Shale for $450 million. The transaction is set to close during the third quarter of this year. The company’s second quarter revenue excluding unrealized hedge losses was $728 million, up by 27% year-over-year. Antero Resources posted a $977 million non-cash loss on unsettled hedges for the quarter, reflecting rising natural gas prices. Stephen J. Errico’s Locust Wood Capital Advisers owns 613,890 shares of Antero Resources Corp (NYSE:AR) as of June 30.
Spectra Energy Partners LP (NYSE:SEP)
– Shares Owned by Mariner Investment Group (as of June 30): 149,500
– Value of Mariner Investment Group’s Holding (as of June 30): $7.05 Million
The New York-based hedge fund manager added a 149,500-share position in Spectra Energy Partners LP (NYSE:SEP) to its portfolio during the April-to-June period. The position was worth $7.05 million at the end of the second quarter and accounted for 2.4% of the value of the firm’s equity portfolio. The pipeline and natural-gas storage company has seen the value of its shares jump by a little less than 2% since the start of the year. Operating revenue from Spectra Energy Partners, the company’s largest business that focuses on providing transmission, storage and gathering of natural gas, was $618 million in the second quarter, up from $603 million recorded a year earlier. The increase was mainly attributable to expansion projects. The company’s Board recently approved a quarterly cash distribution of approximately $0.664 per share, which marked the 35th consecutive quarterly increase to its cash distribution. The latest quarterly distribution provides an annual yield of 5.48%. Jim Simons’ Renaissance Technologies LLC was the owner of 310,200 shares of Spectra Energy Partners LP (NYSE:SEP) at the end of March.
The second page of this article will reveal three other energy-related equity investments favored by Mariner Investment Group.