As oil prices are looking to rebound, the energy sector has been able to garner the support of more money managers. According to Morningstar data, the sector has gained some 6.36% year-to-date. We decided to take a closer look at the energy companies which have the most backing as of March 31, from the over 700 hedge funds that we track . The list was headed by Sunedison Inc (NYSE:SUNE), Cheniere Energy, Inc. (NYSEMKT:LNG), Anadarko Petroleum Corporation (NYSE:APC), Macquarie Infrastructure Company LLC (NYSE:MIC), and Baker Hughes Incorporated (NYSE:BHI).
Insider Monkey tracks hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. These stocks were able to generate alpha because of their lower risk profile. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month. These stocks were slightly riskier, so their monthly alpha was 80 basis points (read the details here). Since the official launch of our small-cap strategy in August 2012 it has performed just as predicted, returning over 144% and beating the market by more than 84 percentage points.
Sunedison Inc (NYSE:SUNE) occupies the first spot as 94 hedge funds have poured in an aggregate investment of $4.44 billion into the company as of the end of the first quarter compared to 80 firms with $3.73 billion invested at the end of 2014. David Einhorn‘s Greenlight Capital and Larry Robbins‘ Glenview Capital were the two largest shareholders of Sunedison Inc (NYSE:SUNE) with 24.95 million and 11.96 million shares respectively at the end of March. The stock of the $8.08 billion operator of clean power generation assets has appreciated by a staggering 57.2% year-to-date. Sunedison Inc (NYSE:SUNE) is planning to launch an IPO for its second yieldco after its first, TerraForm Power Inc (NASDAQ:TERP) went public last summer. The new yieldco will have a proposed maximum value of $700 million. The dividend growth-oriented yieldco is aiming to operate clean power generation assets in emerging markets including China, Brazil, India, South Africa, Peru, Uruguay, Malaysia and Thailand. While Sunedison Inc (NYSE:SUNE) has been growing quickly by piling on considerable amounts of debt (long term debt stood at $7.75 billion at the end of the first quarter) in the prevalent low interest rate environment, that capital structure could pose problems in the future when rates begin to rise.
The popularity of Cheniere Energy, Inc. (NYSEMKT:LNG) among hedge funds increased to 11.1% at the end of the first quarter, up from 10.2% in the previous quarter. Hedge fund investments in the company climbed to $9.75 billion from 81 funds up from $7.96 billion from 75 firms at the end of last year. Andreas Halvorsen‘s Viking Global held the largest stake in Cheniere Energy, Inc. (NYSEMKT:LNG) with some 15.45 million shares valued at $1.20 billion. The $18.22 billion energy company’s stock is up by nearly 7% year-to-date as compared to a 0.26% gain for the Oil & Gas Midstream industry in the same period. Cheniere Energy, Inc. (NYSEMKT:LNG)’s Sabine Pass LNG terminal is set to become the first large-scale plant to ship LNG from the continental U.S as its first train is expected to start production this year. Recently, federal regulators granted the company permission to expand its LNG production facilities by another two trains, taking the total to six. The prevailing low price of oil and a slowdown in Asia’s economy are some factors that weigh on Cheniere Energy, Inc. (NYSEMKT:LNG)’s future prospects, at least in the short run.