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Why These Five Energy Stocks Crashed on Monday?

On Monday, Wall Street is trading lower led by a drop in tech stocks and concerns regarding the future of oil prices. Among the top losers are several energy stocks, including Chesapeake Energy Corporation (NYSE:CHK), Williams Companies Inc (NYSE:WMB), Williams Partners LP (NYSE:WPZ), Energy Transfer Equity LP (NYSE:ETE), and Energy Transfer Partners LP (NYSE:ETP). In this article, we are going to take a look at the latest developments that have sent these stocks lower today and see what smart money investors think about them.

While there are many metrics that investors can assess in the investment process, the hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).

Back to Monday’s losers, we’ve got Energy Transfer Equity LP (NYSE:ETE), which is off by 37% and reached a 52-week low, based on a SEC filing stating that CFO Jamie Welch, a man who was involved in the merger with Williams Companies Inc (NYSE:WMB), will be replaced by  Thomas Long, Energy Transfer Partners (NYSE:ETP)’s CFO. This news has probably generated fear in investors about the proposed acquisition of the company Williams Cos. (WMB). Moreover, the analysts at Robert W. Baird downgraded the stock to ‘Neutral’ from ‘Outperform’ and lowered the price target to $7 from $30. Other company that is affected by the regulatory filing is Energy Transfer Partners LP (NYSE:ETP), which is 22% in the red today, despite Jim Cramer’s positive view of the firm’s dividends.

Energy Transfer Equity LP (NYSE:ETE) lost popularity among the investors that we track in the third quarter. A total of 27 funds held shares of the company at the end of September, down by six over the quarter, and they amassed only 3.2% of the float. Among them, Daniel S. Och‘s Oz Management was the largest shareholder, reporting a position of 13.68 million shares in its last 13F filing.

On the other hand, the hedge fund sentiment towards Energy Transfer Partners LP (NYSE:ETP) remained unchanged, as the number of investors long the stock stood at 18 at the end of the third quarter. Among the bulls was Alec Litowitz and Ross Laser‘s Magnetar Capital, with a holding of 4.27 million shares at the end of September.

Williams Companies Inc (NYSE:WMB) and Williams Partners LP (NYSE:WPZ) have also plunged following the news from Energy Transfer Equity. Contributing to their fall is also the decline of oil prices, as well as the announcement regarding the restructuring of Chesapeake Energy Corporation, which will be discussed later on in this article.

Between July and September of the last year, Williams Companies Inc (NYSE:WMB) witnessed a decrease in popularity among the funds that we track, with 73 investors holding long positions at the end of September, versus 86 at the end of June. Among them, Keith Meister’s Corvex Capital was the largest shareholder, reporting ownership of 41.68 million shares as of the end of the third quarter.

The hedge fund sentiment towards Williams Partners LP (NYSE:WPZ) has been steady, as the number of investors long the stock remained unchanged at 19 during the third quarter of 2015. Alec Litowitz and Ross Laser‘s Magnetar Capital was the largest shareholder of Williams Partners LP (NYSE:WPZ) in our database, with 2.9 million shares valued at $92.4 million, according to its last 13F filing.

In other news, Chesapeake Energy Corporation (NYSE:CHK)’s stock is 35% in the red as investors are afraid of a possible bankruptcy. However, the natural gas producer said it has “no plans” to file for bankruptcy, and it has hired the law firm Kirkland & Ellis to improve its balance sheet through restructuring. Last week, Linn Energy LLC (NASDAQ:LINE) has taken similar actions.

During the third quarter, Chesapeake Energy Corporation (NYSE:CHK) registered a slightly increase in popularity among the funds we track, with 34 investors holding long positions at the end of the third quarter, versus 33 funds a quarter earlier and they amassed 24.8% of the float at the end of September. Carl Icahn‘s Icahn Capital was the largest shareholder with 73.05 million shares owned at the end of September

Disclosure: None

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