1. Vistra (NYSE:VST)
Number of Hedge Fund Holders: 93
Market Capitalization as of September 2: $29.35 Billion
Vistra (NYSE:VST) is a vertically integrated energy company based in Texas. The company focuses on a diversified energy portfolio and is involved in electricity generation, wholesale energy sales, fuel production, and logistics. Vistra (NYSE:VST) supplies electricity and natural gas to residential, commercial, and industrial customers. Vistra (NYSE:VST) also operates battery energy storage facilities and its nuclear assets play a vital role in supplying energy for artificial intelligence (AI).
As the demand for renewable energy particularly from AI and data centers is surging, Vistra (NYSE:VST) is exceptionally well-positioned to capitalize on this trend. In March 2024, Vistra (NYSE:VST) completed the acquisition of Energy Harbor, which expanded its nuclear capabilities by 4,000 megawatts and added approximately 1 million additional retail customers to its portfolio. Vistra (NYSE:VST) has also implemented AI technologies within its operations to increase the efficiency of its power plants, enhance thermal efficiency, and reduce carbon emissions. The company implemented the Heat Rate Optimizer (HRO) in almost 67 power-generation units across 26 plants which helped the company achieve an average 1% improvement in efficiency and company save millions in operational costs.
In their second quarter 2024 investor letter, Legacy Ridge Capital stated the following remarks regarding Vistra (NYSE:VST):
“One of the sectors we know well which had been out of favor for several years has quickly come into favor: Independent Power Producers (IPPs). We’ve written consistently about NRG and Vistra Corp. (NYSE:VST) since the 2019 letter, have owned each, or both, since 2018, and invested a meaningful amount of our assets in VST specifically the past few years. Nate and I intend on spending more time in the year-end letter on our updated views on the IPPs and our learnings from the on-going investment, but we were a bit surprised how quickly the narrative around these companies changed. Our Blue Sky 2030 estimates of intrinsic value converged with the share price 6-years before we thought probable.
For the quarter that ended on June 30, Vistra’s (NYSE:VST) operations net income, which reflects its core business activities, increased to $492 million from $409 million in the previous year. Additionally, the company’s Adjusted EBITDA increased by 40% to $1.41 billion compared to $1.0 billion for the same quarter in the previous year.
Vistra (NYSE:VST) is a strong contender for data centers in need of dependable and clean energy solutions. The company’s strategic investments in renewable energy, combined with its capability to harness AI and take advantage of market trends, offer an attractive opportunity for investors seeking to profit from the ongoing energy shift. Vistra (NYSE:VST) has a market cap of $29.35 billion as of September 2. The stock is held by 93 hedge funds with stakes worth $4.03 billion as of the second quarter. Lone Pine Capital is the largest shareholder with stocks worth $587.93 million as of June 30.
While we acknowledge the potential of Vistra (NYSE:VST) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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