Astenbeck Capital Management is a Connecticut-based hedge-fund firm that specializes in oil. It was co-founded in 2010 by the high-profile crude trader and CEO of Phibro LLC, Andrew Hall – who now owns 80% of the company, and Occidental Petroleum Corporation (NYSE:OXY), with the aim of managing hedge funds on behalf of Phibro’s outside investors. Quite recently, Astenbeck filed its 13F for the first quarter of 2016, disclosing four long equity positions held as of March 31. The stakes were valued at more than $110 million by the end of the quarter, up from $63.4 million in the previous quarter. So, let’s take a look into legendary Andrew Hall’s energy picks for the second quarter of 2016.
Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).
#4 CME Group Inc (NASDAQ:CME)
– Number of shares owned by Astenbeck as of March 31: 30,000
– Value of Astenbeck’s stake as of March 31: $2.88 Million
Astenbeck’s stake in CME is the only one that remained unchanged over the first quarter of the year. Other funds that seemed bullish on the company included William Von Mueffling’s Cantillon Capital Management, which last disclosed ownership of 2.46 million shares, valued at $236.6 million by March 31, and Panayotis Takis Sparaggis’ Alkeon Capital Management, which started a stake comprising 1.27 million shares (worth $122.1 million) by the end of the first quarter. Over the first few days of the second quarter, the stock plummeted considerably, but has, since then, managed to recuperate; shares are now up 0.6% since April 1. On more recent news, research firm Sterne Agree initiated coverage of CME Group Inc (NASDAQ:CME) with a Neutral rating and $90 price target on Friday. Three days before that, the company reiterated its commitment to paying out a $0.60 per share quarterly dividend, payable on June 27. for shareholders of record as of June 10. Finally, on Monday, it was announced that, as of June 6, investors will be able to trade aluminum alloy futures contracts issued by the company.
#3 EOG Resources Inc (NYSE:EOG)
– Number of shares owned by Astenbeck as of March 31: 262,000
– Value of Astenbeck’s stake as of March 31: $19 Million
Next up is EOG Resources Inc (NYSE:EOG), a stock that the firm had already held between the fourth quarter of 2014 and the fourth quarter of 2015. At some point between October and December of 2015, Astenbeck closed out its 261,872-share sstake in the company, as the stock got a good beating. However, the shares started to recuperate in 2016, having posted gains of 14.5% year-to-date. Over the first quarter, the firm once again opened a position in EOG, comprising 262,000 shares. Another fund that acquired exposure to the company over the first quarter was Robert Bishop’s Impala Asset Management, which bought 207,509 shares over the period. Since the beginning of the second quarter, shares have experienced plenty of strength, surging more than 11.6%, helped by recuperating oil prices and an earnings beat in early May – when the company reported a net loss of $0.83 per share, $0.01 thinner than the Street expected. Finally, on Thursday, the stock lost 0.41% after Johnson Rice downgraded it to Hold from Accumulate.
#2 Pioneer Natural Resources (NYSE:PXD)
– Number of shares owned by Astenbeck as of March 31: 150,545
– Value of Astenbeck’s stake as of March 31: $21.18 Million
Another newcomer to Mr. Hall’s equity portfolio during the first quarter was Pioneer Natural Resources (NYSE:PXD), which saw the fund acquire 150,545 shares, becoming one of the top 20 hedge fund investors in the company – among those we track. It should be noted that, same as in the case above, the firm has previously held a position in the company, which was closed out during the fourth quarter of 2015. Despite a 73% reduction in its exposure, Andreas Halvorsen’s Viking Global remained that largest stockholder in our database, with 2.55 million shares, worth almost $360 million by March 31. Among new stakes, the largest was initiated by John Labanowski’s Brenham Capital Management; the fund acquired 650,000 shares of Pioneer over the January to March period. Interestingly, since the period ended, the shares have gained more than 17.5%, mostly thanks to a large earnings beat in late April, when the company reported a net loss of ($0.64) per share, $0.11 smaller than the Street expected. In other news, CEO Scott Sheffield announced on Thursday that he will retire by the end of 2016, leaving his spot to COO Timothy Dove.
#1 Occidental Petroleum Corporation (NYSE:OXY)
– Number of shares owned by Astenbeck as of March 31: 980,000
– Value of Astenbeck’s stake as of March 31: $67 Million
Finally, there’s Occidental Petroleum Corporation (NYSE:OXY), which remained in the same place in Hall’s list as in the previous quarter after a 9% increase in the firm’s position. The stake accounted for more than 60% of Astenbeck’s first quarter equity portfolio, making it, in a sense, the most committed institutional investor – no other large money management firm has such a large chunk of its assets invested in the company. However, a few firms held much larger stakes in terms of value. Among them, we can count Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, with 3.44 million shares, and John A. Levin’s Levin Capital Strategies, with 2.86 million shares. Since the first quarter ended, Occidental Petroleum’s stock has gained almost 10%, helped by recuperating oil prices and a raise in its 2016 production growth guidance from 2%-4% to 4%-6%. Over the past couple of days, the company has received more attention than usual on rumors that it might acquire Apache Corporation (NYSE:APA) for $25 billion or more.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.