In this article, we discuss the 10 oil and gas stocks to buy according to Phill Gross’s Adage Capital. If you want to skip our detailed analysis of Gross’s history, investment philosophy, and hedge fund performance, go directly to the 5 Oil and Gas Stocks to Buy According to Phill Gross’s Adage Capital.
Former Harvard endowment executive Phill Gross oversees Boston-based hedge fund firm Adage Capital Management. Gross co-founded the money management firm with Robert Atchinson in 2001. The fund’s assets under management have grown from $3.8 billion since the foundation to $50.7 billion as of September 30, 2021.
The hedge fund holds a diversified portfolio and invests in various industries including technology, healthcare, industrials, financials, utilities, consumer goods, and energy. Phill Gross, who spent 18 years as a healthcare analyst at Harvard Management Company, now manages the healthcare sector at Adage Capital. In this article, we will discuss Gross’s top oil and gas stocks.
Billionaire Phill Gross’s Adage Capital Management focuses on managing S&P 500 assets for endowments and foundations. Some of the biggest oil and gas stocks in Adage Capital’s Q3 2021 portfolio include Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP), Pioneer Natural Resources Company (NYSE:PXD), and Chesapeake Energy Corporation (NYSE:CHK).
Phillip Gross of Adage Capital
Our Methodology
We picked these oil and gas stocks from the Q3 portfolio of Phillip Gross’s Adage Capital Management. Insider Monkey’s data on 867 hedge funds were used to gauge hedge fund sentiment toward each stock.
Let’s start our list of the 10 oil and gas stocks to buy according to Phill Gross’s Adage Capital.
Oil and Gas Stocks to Buy According to Phill Gross’s Adage Capital
10. Royal Dutch Shell plc (NYSE:RDS)
Number of Hedge Fund Holders: 33
Royal Dutch Shell plc (NYSE:RDS), an integrated oil and gas company, is one of the oil and gas stocks in billionaire Phill Gross’s portfolio. In addition to the exploration and production of oil and gas, the Netherlands-based energy firm also markets petrochemicals internationally.
In early December, Deutsche Bank analyst James Hubbard maintained a Buy rating on Royal Dutch Shell plc (NYSE:RDS). Hubbard increased his price target for the stock to 2,038 GBP from 1,871 GBP. As of Q3 2021, 33 hedge funds in Insider Monkey’s database reported owning stakes in Royal Dutch Shell plc (NYSE:RDS), compared to 38 in the previous quarter.
Adage Capital Management holds 350,000 shares in Royal Dutch Shell plc (NYSE:RDS) in Q3, worth roughly $15.6 million. The company represented 0.03% of Phill Gross’s portfolio.
Here is what Goehring & Rozencwajg Associates has to say about Royal Dutch Shell plc in its Q3 2021 investor letter:
“Royal Dutch Shell’s ESG challenges continue unabated. A Dutch court ruled in May that Royal Dutch Shell must cut its CO2 output by 45% by 2030 to align their policies with the Paris Climate Accord. In a statement issued after the verdict, a Shell spokesperson acknowledged that “urgent action is needed on climate change and the company is accelerating efforts to reduce emissions.” If the pressure from the Dutch court system was not enough, an activist shareholder has proposed breaking the company apart to address ESG concerns. On October 27th, Third Point Management announced the following.
“If Shell pursues this type of strategy it would probably lead to an acceleration of carbon dioxide reduction. […] Breaking Shell into two operating units would create a standalone legacy energy business (upstream, refining, and chemicals) that could slow capex beyond what is has already promised, sell assets, and prioritize return of cash to shareholder which can be reallocated into low-carbon areas of the market.”
Shell has already cut spending dramatically over the last decade. After having peaked at $39 bn in 2013, upstream capital spending fell to only $17 bn in 2020 – a drop of nearly 60%. Spending has barely recovered in the three quarters of 2021. A lack of spending has already impacted production. Proforma for the 2016 acquisition of BG Group, Shell’s total production has fallen 13% since capital spending peaked in 2013. These trends are accelerating: Shell’s production over the first nine months of 2021 have fallen 7% compared with the same period last year.
If Royal Dutch Shell’s upstream capital spending remains at today’s depressed levels, we estimate the company will only be able to replace 30% of production with new reserves and that production will fall 40% over the next nine years. If spending is further curtailed (as is being proposed), Shell’s oil and natural gas production would collapse – something that may have already started.”
9. Phillips 66 (NYSE:PSX)
Number of Hedge Fund Holders: 34
Phillips 66 (NYSE:PSX) is a diversified energy firm that operates in the refining, midstream, and marketing of crude oil and gas products. In Q3 2021, Phillips 66 (NYSE:PSX) accounted for 0.03% of Adage Capital Management’s total holdings. Although investor Phillip Gross cut his stake in the oil company by 50%, the fund still owns 281,501 shares of the company at the end of the September quarter.
Phillips 66 (NYSE:PSX) has a global refining capacity of 2.2 million barrels of crude oil per day, having 13 refineries in Europe and the United States.
JPMorgan analyst Phil Gresh is bullish on Phillips 66 (NYSE:PSX) as he upgraded the energy company to Overweight from Neutral on December 8. Gresh likes the company’s in-demand Refinery segment. Phil Gresh increased his price target for the stock to $93 from $83.
The number of hedge funds tracked by Insider Monkey having stakes in Phillips 66 (NYSE:PSX) grew to 34 at the end of September 2021, from 26 in the preceding quarter.
8. Antero Resources Corporation (NYSE:AR)
Number of Hedge Fund Holders: 41
At the end of Q3 2021, 41 hedge funds tracked by Insider Monkey reported owning stakes in Antero Resources Corporation (NYSE:AR), down from 33 in the previous quarter. These stakes are valued at over $973 million.
Adage Capital Management re-entered its position in Antero Resources Corporation (NYSE:AR) after removing the oil and gas company’s shares from its holdings in Q4 2014. Phillip Gross spent $19.7 million on over 1.04 million shares of Antero Resources Corporation (NYSE:AR) in the third quarter of 2021.
Oil and gas firm Antero Resources Corporation (NYSE:AR) operates on 542,000 net acres in the southwestern center of the Marcellus and Utica Shales. The Colorado-based company produces 160,000 barrels of natural gas liquids per day and 12,000 barrels of oil per day.
Despite missing analyst revenue expectations in the third quarter, Antero Resources Corporation’s (NYSE:AR) sales rose 40% year over year to $534 million.
Ken Fisher’s Fisher Asset Management was Antero Resources Corporation’s (NYSE:AR) largest shareholder in Q3, with a stake worth $115 million.
Analysts are watching Antero Resources Corporation (NYSE:AR) along with Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP), Pioneer Natural Resources Company (NYSE:PXD), and Chesapeake Energy Corporation (NYSE:CHK).
7. Marathon Petroleum Corporation (NYSE:MPC)
Number of Hedge Fund Holders: 43
Marathon Petroleum Corporation (NYSE:MPC) is a downstream energy company that focuses on refining, marketing, and transporting petroleum products. The Ohio-based oil company also offers industrial petroleum-based products such as asphalt and petrochemicals.
In mid-November, Wells Fargo analyst Roger Read expressed optimism about the refining market in the United States in 2022, raising his price target for Marathon Petroleum Corporation (NYSE:MPC) to $87 from $73 while maintaining an Overweight rating on the stock.
Adage Capital Management increased its stake in the company in the third quarter, bringing its total stake to 1.32 million shares. In the third quarter, the oil company represented 0.16% of the fund’s total holdings.
In Q3, 43 hedge funds tracked by Insider Monkey held stakes in Marathon Petroleum Corporation (NYSE:MPC), compared to 48 in the preceding quarter. These stakes hold a value of over $2.68 billion.
6. Chesapeake Energy Corporation (NYSE:CHK)
Number of Hedge Fund Holders: 44
Chesapeake Energy Corporation (NYSE:CHK) has been one of the most successful shale oil producers in recent months, as energy demand has recovered from the pandemic slump and prices have reached multi-year highs. In November, the Oklahoma-based oil and gas company reported third-quarter revenue of $1.17 billion, which was $361 million higher than expected.
Chesapeake Energy Corporation (NYSE:CHK) is among the oil and gas stock picks by Phillip Gross in Q3 2021. Adage Capital Management owned 1.33 million shares of the oil company between the period of June and September. The total value of this stake is $81.9 million.
On December 12, Johnson Rice analyst Charles Meade upgraded his rating on Chesapeake Energy Corporation (NYSE:CHK) to Buy from Accumulate. Meade maintained a $115 price target for the stock.
At the end of Q3 2021, 44 hedge funds in Insider Monkey’s database reported owning stakes in Chesapeake Energy Corporation (NYSE:CHK), up from 43 in the previous quarter. The total value of these stakes is over $2.17 billion.
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Disclosure. None. 10 Oil and Gas Stocks to Buy According to Phill Gross’s Adage Capital is originally published on Insider Monkey.
