Billionaire George Soros is more than just a philanthropist who has given away over $32 billion. He is more than just a Hungarian Jew who lived through the Nazi occupation in the mid 1940’s. Soros is one of the greatest investors of all time. His past returns have ranked up there with Buffett and Icahn and Soros has made fortunes from different markets and with different investing styles. Due to government regulations, the SEC requires his fund and others to report their holdings every quarter, and we as regular investors get to see what Soros holds. In this article, let’s analyze 5 energy stocks that Soros’ fund bought in the fourth quarter.
Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Enterprise Products Partners L.P. (NYSE:EPD)
Soros Fund initiated a new position of 190,000 shares in Enterprise Products Partners L.P. in the fourth quarter, worth almost $4.7 million at the end of December. Soros Fund isn’t alone in like EPD, Barrett Blaschke of MUFG has an ‘Overweight’ rating and a $35 target, noting that Enterprise Products has ‘market leading set of assets and a market price that does not currently reflect it’. The analyst likes the insight gleaned from EPD’s analyst day and remains positive on the equity.
Marathon Petroleum Corp (NYSE:MPC)
Soros Fund established a stake of 85,000 shares in Q4 worth over $5 million at the end of December in Marathon Petroleum Corp. Shares of the oil and gas refiner have consolidated in 2019 with the stock rising around 2.34% year to date. Doug Leggate of Bank of America Merrill Lynch is a fan, including Marathon Petrol as one of his top rated ideas list. Leggate believes that the worst has passed for independent American refiners and he is less cautious overall on the sector.
Magellan Midstream Partners, L.P. (NYSE:MMP)
Soros’ fund initiated a position of 81,700 shares in Magellan Midstream Partners, L.P. in the fourth quarter. The stock’s quarterly cash distribution rose 7% year over year and 1% quarter of quarter to $1.005 for the period from January 1 through March 31. Shares currently yield around 6.44% around current prices.
EnCana Corporation (NYSE:ECA)
Soros owned 2 million shares of EnCana Corporation , worth $11.56 million dollars at the end of December. The position was a new one for the fund in Q4, and it’s certainly paid off in 2019. Shares are up 22.8% year to date. Despite the good performance in 2019, Arun Jayaram of JPMorgan has a ‘Neutral’ rating and $12 target price on Encana, down from the previous ‘Overweight’ rating. The analyst is still ‘positive’ but wants to see additional drilling result data from Enca’s newly acquired STACK acreage.
WPX Energy Inc (NYSE:WPX)
Soros Fund initiated a new position of 700,000 shares in the fourth quarter worth $7.945 million at the end of December. Shares have risen 24% year to date as WTI sentiment has improved and as the M&A triggered from the sale of Anadarko has helped some bullish views on independent oil names. Analysts have an average price target of $19.49 per share.
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