Were Hedge Funds Right Betting On These Energy Stocks?

#1 Anadarko Petroleum Corporation (NYSE:APC)

-Hedge Funds with Long Positions (as of September 30): 70

-Aggregate Value of Hedge Funds’ Holdings (as of September 30): $3.38 billion

Finally, the most popular energy stock among hedge funds at the end of the third quarter has emerged as the worst performer in this list. After witnessing a 22.33% decline during the third quarter, shares of Anadarko Petroleum Corporation (NYSE:APC) tumbled by another 20% during the following three months. Moreover, the stock has started 2016 on an even more dismal note by falling 19% year-to-date.

Since Anadarko Petroleum Corporation was involved in several M&A-related rumors in the past few months, one can understand why hedge funds found the stock attractive despite its underperformance. In November it was reported that the company had made an unsolicited bid for Apache Corporation (NYSE:APA) but withdrew the offer after it couldn’t reach a deal. During late-December other rumors emerged that Chinese oil and gas major China Petroleum & Chemical Corp (ADR) (NYSE:SNP) is interested in buying Anadarko Petroleum Corporation. However, analysts and investors were quick to brush off these rumors citing the regulatory obstacles such a deal will face.

Recently, BMO Capital Markets has reaffirmed its ‘Buy’ rating and $70 price target on the stock, while Jefferies Group reduced its price target to $53, maintaining a ‘Buy’ rating. Keith Meister‘s Corvex Capital initiated a stake in the company during the third quarter by purchasing almost 2 million shares.

Disclosure: None