Were Hedge Funds Right Betting On These Energy Stocks?

#4 Schlumberger Limited. (NYSE:SLB)

-Hedge Funds with Long Positions (as of September 30): 61

-Aggregate Value of Hedge Funds’ Holdings (as of September 30): $2.64 billion

Amid an inverted U-shaped move registered during the quarter, shares of Schlumberger Limited. (NYSE:SLB) ended the fourth quarter nearly flat, but they lost 20% throughout the entire year. Interestingly, during the third quarter -when the stock fell by 19.44% – the number of investors with long positions increased by six and the aggregate value of their holdings also jumped by $483 million. Billionaire Israel Englander‘s Millennium Management made a ninefold increase in its stake in the company to 4.17 million shares during the third quarter.

Even though the oil and gas industry is going through a tough time, Schlumberger Limited. (NYSE:SLB) has continued with its history of dividend payments. The $0.50 per share dividend the company pays translates into an attractive dividend yield of 2.90%. However, this tradition seems to be taking a toll on the company’s balance sheet as its short-term debt has been continuously increasing and its total assets has been continuously decreasing for the past several quarters.

For the last quarter of 2015, Schlumberger posted adjusted EPS of $0.65 on revenue of $7.7 billion, versus consensus estimates of $0.63 in EPS and revenue of $7.78 billion. For the full year, the companyțs revenue slid by 27% on the year to $35.5 billion, on the back of reductions in spending on drilling. However, what surprised investors was the $10 billion buyback program that the company announced together with its financial results. The buyback announcement, alongside cost reductions, offset the stock’s decline since the beginning of 2016, with shares currently trading 1.30% in red year-to-date.

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