Miller Value Partners, an investment management company, released its “Deep Value Strategy” first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The Strategy started the year on a strong note, returning +8.39% (net of fees) compared to the S&P 1500 Value Index’s +0.19% and the S&P 600 Value Index’s +4.32% returns. The strategy gained from ongoing rotation to small-cap value stocks and investments made in the energy sector. The year began with broadening market trends favoring lower-valued, smaller-capitalization equities, though this Value outperformance cycle remains overlooked by investors focused on AI and tech firms. The February onset of war in Iran led to increased energy prices, rising bond yields, and market volatility. The firm believes attractive investment opportunities persist in lower-valued securities and smaller market caps, highlighting companies with robust earnings and cash-flow yields. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Miller Value Deep Value Strategy highlighted Crescent Energy Company (NYSE:CRGY) as a newly added position. Crescent Energy Company (NYSE:CRGY) is an energy company engaged in the exploration and production of crude oil, natural gas, and natural gas liquids. On April 15, 2026, Crescent Energy Company (NYSE:CRGY) closed at $12.63 per share. One-month return of Crescent Energy Company (NYSE:CRGY) was -0.32%, and its shares gained 50.72% over the past 52 weeks. Crescent Energy Company (NYSE:CRGY) has a market capitalization of $4.14 billion.
Miller Value Deep Value Strategy stated the following regarding Crescent Energy Company (NYSE:CRGY) in its Q1 2026 investor letter:
“Early in the quarter, we initiated a position in Crescent Energy Company (NYSE:CRGY), a top 10 domestic Energy and Exploration (E&P) company. While a small market cap at time of purchase, Crescent’s significant asset base/free cash flow power should support a mid-cap market cap over time. Crescent’s share price was down 50% over the past year due to weak commodity prices and the completion of Vital Energy acquisition which brought debt leverage to the higher end of the company’s historical range (1.5x). Management has a successful track record of buying assets at a significant discount to their long term value, improving acquired company operations, removing excess costs, driving down development costs, and enhancing well productivity. Vital brings Crescent into the Permian basin with low decline production 10+ year inventory. The company also recently hired an experienced operator who successfully built out Pioneer Natural Resources Permian Assets. Crescent’s asset base has significant flexibility to move within liquids (oil, gas, and NGL), focusing on best capital return potential and maximizing free cash flow over the cycle. Management has also successfully built a mineral asset and royalty business that generates $160M of EBITDA; current private and public transactions have been at 7-11x EBITDA multiples which in our view suggests significant $1-1.5B of underlying value. With acquisitions as a core part of the long-term strategy, there will always be risk of integration challenges. However, the company has been very successful in acquiring assets over the past 10 years and their underwriting is done with conservatism focusing on quick payback and accretion to free cash flow and NAV. With the recent increase in commodity prices and Vital merger synergies, the company may be positioned to deliver $1B+ in annual free cash flow over the next couple of years, although actual results may differ materially. In addition, any unexpected return to lower commodity price environment is an ongoing risk however we believe this is low given the ongoing industry supply challenges. In our view, Crescent shares remain very attractive near 2x cash flow and what we estimate to be a normalized earnings and free cash flow yield near 30%.”
Crescent Energy Company (NYSE:CRGY) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 38 hedge fund portfolios held Crescent Energy Company (NYSE:CRGY) at the end of the fourth quarter, the same as in the previous quarter. While we acknowledge the risk and potential of Crescent Energy Company (NYSE:CRGY) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Crescent Energy Company (NYSE:CRGY) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Crescent Energy Company (NYSE:CRGY) and shared the list of best American energy stocks to buy according to Wall Street analysts. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
