In this article, we discuss 10 energy stocks to buy according to Blackstone Group. If you want to skip our detailed analysis of these stocks, go directly to 5 Energy Stocks to Buy According to Blackstone Group.
Blackstone Group is a leading New York-based alternative investment management company that controls 13F securities worth roughly $40 billion as per the regulatory filings from the fourth quarter of 2021. With the top ten holdings comprising 56.88% of the total 13F securities, Blackstone Group’s main interests lie in the energy sector, with 53.12% of the investments consisting of energy stocks. It also invests in the real estate, utilities and telecommunications, healthcare, finance, industrials, and information technology sectors.
Blackstone Group was initially formed as a mergers and acquisitions firm by Peter G. Peterson and Stephen A. Schwarzman in 1985. One of Blackstone’s most significant projects was assisting in the merger of investment banks E. F. Hutton & Co. and Lehman Brothers in 1987. The company is known for undertaking significant leveraged buyouts. Blackstone acquired Hilton Worldwide for approximately $26 billion in July 2007, representing a 25% premium to Hilton’s record high stock price. Blackstone held a leading position in Hilton until the company became publicly listed again in December 2013.
Blackstone Group is involved in three main lines of operations, including corporate private equity, real estate, and marketable alternative asset management. In Q4 2021, the company’s top buys included Cheniere Energy Partners, L.P. (NYSE:CQP), FirstEnergy Corp. (NYSE:FE), and Rivian Automotive, Inc. (NASDAQ:RIVN). Whereas, Blackstone reduced stakes in TaskUs, Inc. (NASDAQ:TASK), Bumble Inc. (NASDAQ:BMBL), and First Industrial Realty Trust, Inc. (NYSE:FR).
The most notable energy stocks held by Blackstone Group in Q4 2021 include Chesapeake Energy Corporation (NASDAQ:CHK), Cheniere Energy, Inc. (NYSE:LNG), and Diamondback Energy, Inc. (NASDAQ:FANG), among others discussed in detail below.
Our Methodology
We used the Q4 portfolio of Blackstone Group to select its top ten energy stock picks. The companies were ranked according to Blackstone Group’s stake value in each holding. We have mentioned the hedge fund sentiment around the stocks, in addition to available analyst ratings and latest earnings.
Energy Stocks to Buy According to Blackstone Group
10. Targa Resources Corp. (NYSE:TRGP)
Number of Hedge Fund Holders: 35
Percentage of Blackstone Group’s Portfolio: 1.43%
Targa Resources Corp. (NYSE:TRGP) is a midstream energy company that is headquartered in Houston, Texas. The company delivers natural gas and natural gas liquids to customers across the United States. Blackstone Group owns approximately 11 million Targa Resources Corp. (NYSE:TRGP) shares as of Q4 2021, worth $572.8 million, representing 1.43% of the total 13F securities.
On January 20, Targa Resources Corp. (NYSE:TRGP) declared a $0.35 per share quarterly dividend, a 250% increase from its prior dividend of $0.10. The dividend was paid on February 15.
In a press release on February 24, Targa Resources Corp. (NYSE:TRGP) posted a Q4 net loss of $335.4 million. The company also reported a revenue of $5.44 billion, up 111.7% year-on-year, outperforming market consensus by $580 million.
Barclays analyst Theresa Chen on January 20 raised the price target on Targa Resources Corp. (NYSE:TRGP) to $72 from $66 and kept an Overweight rating on the shares. The analyst expects “more variability” across refining results in Q4, reflective of execution during the quarter, but she has a “generally positive outlook for the group in 2022.”
Among the hedge funds tracked by Insider Monkey in Q4 2021, 35 funds were bullish on Targa Resources Corp. (NYSE:TRGP), up from 26 funds in the prior quarter. Zimmer Partners is the largest stakeholder of Targa Resources Corp. (NYSE:TRGP), with 3.8 million shares worth $202.3 million.
In addition to Chesapeake Energy Corporation (NASDAQ:CHK), Cheniere Energy, Inc. (NYSE:LNG), and Diamondback Energy, Inc. (NASDAQ:FANG), Targa Resources Corp. (NYSE:TRGP) is a notable energy stock in Blackstone Group’s Q4 portfolio.
9. PG&E Corporation (NYSE:PCG)
Number of Hedge Fund Holders: 59
Percentage of Blackstone Group’s Portfolio: 1.44%
PG&E Corporation (NYSE:PCG) operates via its subsidiary, Pacific Gas and Electric Company, supplying electricity and natural gas to customers in northern and central California. Blackstone Group held 47.5 million PG&E Corporation (NYSE:PCG) shares during the fourth quarter of 2021, worth $577.60 million, accounting for 1.44% of the fund’s total investments for the period.
On February 10, PG&E Corporation (NYSE:PCG) reported its fourth quarter earnings, posting an EPS of $0.28, in line with analysts’ consensus estimates. The $5.25 billion revenue jumped 10.49% from the prior-year quarter, missing market consensus by $74.38 million. PG&E Corporation (NYSE:PCG) issued in-line guidance for FY 2022, seeing adjusted EPS of $1.07-$1.13, compared with a $1.12 consensus estimate.
Mizuho analyst Paul Fremont on January 31 raised the price target on PG&E Corporation (NYSE:PCG) to $17.50 from $16 and kept a Buy rating on the shares.
According to the Q4 database of Insider Monkey, 59 hedge funds held long positions in PG&E Corporation (NYSE:PCG), up from 54 funds in the quarter earlier. Dan Loeb’s Third Point held the biggest stake in PG&E Corporation (NYSE:PCG), with 77 million shares worth $934.78 million.
Here is what GoodHaven Capital Management has to say about PG&E Corporation (NYSE:PCG) in their Q4 2020 investor letter:
“During the period we purchased a new holding – PG&E Corporation – the California based utility (PCG). We expect that contrarian special situations will continue to (opportunistically) be an important part of the portfolio. After all, we bought PCG – which has filed Ch. 11 twice related to prior exposure to wildfire liabilities and staggering mismanagement – right in the middle of California’s recent heavy wildfire season. Our thinking here is that the reorganized utility has new regulatory protections that significantly reduces wildfire liability exposure, an above average rate growth profile and potentially much better management – they were searching for a new CEO when we made our investment. We purchased the stock at a high single digit forward earnings multiple, a discount to its peers that trade in the mid to high teens. Shortly after our purchases PG&E hired the well regarded Patti Poppe as their new CEO – we like this decision.”
8. Chesapeake Energy Corporation (NASDAQ:CHK)
Number of Hedge Fund Holders: 50
Percentage of Blackstone Group’s Portfolio: 2.10%
Chesapeake Energy Corporation (NASDAQ:CHK) is an Oklahoma-based company that develops properties for the production of oil, natural gas, and natural gas liquids across the United States. Chesapeake Energy Corporation (NASDAQ:CHK) stock represents 2.10% of Blackstone Group’s Q4 portfolio, with the fund holding more than 13 million shares worth roughly $840 million.
Publishing its Q4 results on February 23, Chesapeake Energy Corporation (NASDAQ:CHK) reported earnings per share of $2.39, missing market consensus estimates by $0.09. Revenue for the period jumped 134.38% year-on-year to $1.79 billion, outperforming analysts’ predictions by $705.52 million.
On February 11, JPMorgan analyst Zach Parham initiated coverage of Chesapeake Energy Corporation (NASDAQ:CHK) with an Overweight rating and a $85 price target. The company emerged from Chapter 11 restructuring in February 2021 with a much improved balance sheet, a lower cost structure given renegotiated midstream costs, and a revamped board focused on the key metric of the “Shale 3.0 era”, which is generating free cash flow and returning that cash to shareholders, the analyst told investors in a bullish note.
Oaktree Capital Management held the biggest stake in Chesapeake Energy Corporation (NASDAQ:CHK) in Q4 2021, with 12 million shares worth $774.3 million. Overall, 50 hedge funds were bullish on the stock at the end of December 2021.
7. Diamondback Energy, Inc. (NASDAQ:FANG)
Number of Hedge Fund Holders: 45
Percentage of Blackstone Group’s Portfolio: 2.86%
Blackstone Group owns over 10.5 million shares of Diamondback Energy, Inc. (NASDAQ:FANG) as of Q4 2021, worth $1.14 billion, representing 2.86% of the 13F securities. Diamondback Energy, Inc. (NASDAQ:FANG) is a Texas-based company that develops and explores onshore oil and natural gas reserves in the Permian Basin in West Texas.
Diamondback Energy, Inc. (NASDAQ:FANG) on February 22 declared a $0.60 per share quarterly dividend, a 20% increase from its prior dividend of $0.50. The dividend will be paid on March 11, to shareholders of record on March 4.
According to the Q4 database of Insider Monkey, 45 hedge funds were bullish on Diamondback Energy, Inc. (NASDAQ:FANG), down from 51 funds in the prior quarter. Harris Associates is the biggest Diamondback Energy, Inc. (NASDAQ:FANG) shareholder, with a $328 million position in the company.
On February 23, TD Securities analyst Menno Hulshof raised the price target on Diamondback Energy, Inc. (NASDAQ:FANG) to $150 from $140 and kept a Buy rating on the shares following the “solid beat” in Q4. The analyst considers current share levels an attractive entry point for a “Permian pure-play with a peer-leading cost structure, and a strong commitment to returning at least” 50% of free cash flow.
Here is what Miller Opportunity Equity has to say about Diamondback Energy, Inc. (NASDAQ:FANG) in its Q4 2021 investor letter:
“Diamondback Energy (FANG) returned 14.4% in the quarter as oil price rose and fell during the quarter ending the period largely in the same place that it started. The company reported strong 3Q results beating on the top and bottom line. The company reported revenue of $1.9B beating consensus of $1.5B with EPS of $2.94 beating expectations for $2.79. The beat was driven by a combination of higher volumes, higher realizations, and efficiency gains. The company increased its total production guidance for the year to 370-372mboe/d1 (up from 363-370mboe/d) while lowering Capital Expenditure (CAPEX) guidance for the second time this year to $1.49-1.53B. The company raised the dividend for the third time this year to $2/share annually while authorizing a new $2B share repurchase program. Starting in 4Q21, the company plans to return 50% of Free Cash Flow to shareholders through the base dividend and a combination of buybacks and special dividends. Finally, the CEO Travis Stice announced plans to reduce methane emissions by 70% as part of the firm’s ESG initiative.”
6. FirstEnergy Corp. (NYSE:FE)
Number of Hedge Fund Holders: 40
Percentage of Blackstone Group’s Portfolio: 3.0%
FirstEnergy Corp. (NYSE:FE) is an Ohio-based company that operates coal, nuclear, hydroelectric, natural gas, wind, and solar power generating facilities. Blackstone Group owns a $1.19 billion stake in FirstEnergy Corp. (NYSE:FE), representing 3% of the total 13F securities.
On December 21, FirstEnergy Corp. (NYSE:FE) declared a $0.39 per share quarterly dividend, in line with previous. The dividend will be paid on March 1, to shareholders of record on February 7.
Michael Lonegan, an analyst from Evercore ISI, upgraded FirstEnergy Corp. (NYSE:FE) on January 7 to Outperform from In Line with a price target of $46, up from $40. According to the analyst, FirstEnergy Corp. (NYSE:FE) shares present an “inexpensive opportunity” that has not yet completely realized the benefits of transitioning to a fully regulated electric utility.
In Q4 2021, 40 hedge funds in the database of Insider Monkey reported owning stakes in FirstEnergy Corp. (NYSE:FE), valued at $1.75 billion. Icahn Capital LP is the biggest shareholder of the company, with roughly 19 million shares worth $788.8 million.
FirstEnergy Corp. (NYSE:FE) is a popular energy stock among elite hedge funds, just like Chesapeake Energy Corporation (NASDAQ:CHK), Cheniere Energy, Inc. (NYSE:LNG), and Diamondback Energy, Inc. (NASDAQ:FANG).
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Disclosure: None. 10 Energy Stocks to Buy According to Blackstone Group is originally published on Insider Monkey.
