In this article, we discuss 5 energy stocks to buy according to Joe Huber’s Huber Capital Management. If you want our detailed analysis of these stocks, go directly to 10 Energy Stocks to Buy According to Joe Huber’s Huber Capital Management.
5. ConocoPhillips (NYSE:COP)
Huber Capital Management’s Stake Value: $4,371,000
Percentage of Huber Capital Management’s 13F Portfolio: 1.12%
Number of Hedge Fund Holders: 49
ConocoPhillips (NYSE:COP) is a Texas-based multinational corporation that specializes in hydrocarbon exploration, petroleum, natural gas, natural gas liquids, bitumen, and liquefied natural gas. Joe Huber’s Huber Capital Management owns 64,500 ConocoPhillips (NYSE:COP) shares as of Q3 2021, worth $4.3 million, representing 1.12% of the hedge fund’s total 13F investments.
On February 3, ConocoPhillips (NYSE:COP) posted its Q4 results. The company reported earnings per share of $2.27, beating estimates by $0.08. Revenue for the quarter jumped roughly 164% year-over-year to $15.96 billion, surpassing estimates by $2.56 billion.
ConocoPhillips (NYSE:COP) on February 3 declared a $0.46 per share quarterly dividend, in line with previous. The dividend will be paid on March 1, to shareholders of record on February 14. The company announced an increase of $1 billion in expected 2022 return of capital to shareholders to a new total of $8 billion, which is an increase of more than 30% over 2021.
RBC Capital analyst Scott Hanold raised the price target on ConocoPhillips (NYSE:COP) on February 4 to $110 from $100 and kept an Outperform rating on the shares. The analyst is positive on the company’s total shareholder return of 7%-8%, adding that its portfolio also has “high exposure” to some of the more robust markets such as European gas, LNG, Brent oil, and Permian oil. He further observed that ConocoPhillips (NYSE:COP) has diverse assets and operational opportunities to keep inflation-related costs in check.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 49 funds were bullish on ConocoPhillips (NYSE:COP), with stakes equalling $1.37 billion. Fisher Asset Management held the largest stake in ConocoPhillips (NYSE:COP), with 5.95 million shares worth $403.5 million.
Here is what ClearBridge Large Cap Value Strategy has to say about ConocoPhillips (NYSE:COP) in its Q3 2021 investor letter:
“We also seized the opportunity to add to our position in energy producer ConocoPhillips at what we considered an attractive valuation. The market rewarded this move late in the quarter after ConocoPhillips announced its purchase of Permian Basin assets from Shell, making the company the second-largest oil and gas producer in the contiguous U.S. We view this as a positive strategic transaction for a well-run, ESG-cognizant oil producer. With this and prior transactions, the company continues to press its cost advantage and is well-positioned to benefit from ongoing energy demand recovery to pre-pandemic levels.”
4. Chesapeake Energy Corporation (NASDAQ:CHK)
Huber Capital Management’s Stake Value: $4,441,000
Percentage of Huber Capital Management’s 13F Portfolio: 1.14%
Number of Hedge Fund Holders: 44
Huber Capital Management owns 72,100 Chesapeake Energy Corporation (NASDAQ:CHK) shares as of Q3 2021, worth $4.44 million, representing 1.14% of the fund’s 13F portfolio. Chesapeake Energy Corporation (NASDAQ:CHK) is an Oklahoma-based company engaged in hydrocarbon expansion, known primarily for supplying petroleum and natural gas.
On January 25, Chesapeake Energy Corporation (NASDAQ:CHK) agreed to acquire Chief E&D Holdings and associated non-operating interests for $2 billion in cash and approximately 9.44 million common shares, confirming earlier speculation. The company also announced that it would sell its Powder River Basin assets in Wyoming to Continental Resources, Inc. (NYSE:CLR) for roughly $450 million in cash.
MKM Partners analyst John Gerdes raised the price target on Chesapeake Energy Corporation (NASDAQ:CHK) to $98 from $95 and kept a Buy rating on the shares. The analyst updated his model to reflect the company’s announced acquisition of northern Pennsylvania Marcellus assets from Chief E&D Holdings, along with divesting its Powder River Basin assets.
Among the hedge funds tracked by Insider Monkey, Oaktree Capital Management is the biggest Chesapeake Energy Corporation (NASDAQ:CHK) stakeholder, with roughly 12 million shares worth $735.3 million. Overall, 44 hedge funds were bullish on Chesapeake Energy Corporation (NASDAQ:CHK) in Q3 2021, with stakes totalling $2.1 billion.
3. Chevron Corporation (NYSE:CVX)
Huber Capital Management’s Stake Value: $7,061,000
Percentage of Huber Capital Management’s 13F Portfolio: 1.82%
Number of Hedge Fund Holders: 51
Chevron Corporation (NYSE:CVX) is a California-based company that is engaged in energy, chemical, and petroleum operations worldwide. Huber Capital Management elevated its stake in Chevron Corporation (NYSE:CVX) by 12% in Q3 2021, holding 69,600 shares of the company, worth over $7 million. The stock accounts for 1.82% of the fund’s total 13F investments.
On January 28, Chevron Corporation (NYSE:CVX) posted earnings for the fourth quarter. The company announced an EPS of $2.56, missing consensus estimates by $0.56. Chevron Corporation (NYSE:CVX)’s revenue for the period jumped 90.64% from the prior-year quarter, totalling $48.13 billion, surpassing estimates by $2.83 billion.
Chevron Corporation (NYSE:CVX) declared on January 26 a $1.42 per share quarterly dividend, which is a 6% increase from its prior dividend of $1.34. The dividend is payable on March 10, to shareholders of record on February 16.
Cowen analyst Jason Gabelman raised the price target on Chevron Corporation (NYSE:CVX) on January 31 to $133 from $122 and kept an Outperform rating on the shares. The analyst stated that the near-term stock performance could be uninspiring although the upcoming analyst day could be positive, but raised his price target due to higher oil prices.
According to the hedge funds monitored by Insider Monkey, 51 funds were bullish on Chevron Corporation (NYSE:CVX), with collective stakes equalling $4.44 billion. Billionaire Warren Buffett’s Berkshire Hathaway held the largest position in Chevron Corporation (NYSE:CVX), with 28.70 million shares worth $2.91 billion.
Here is what Goehring & Rozencwajg Associates has to say about Chevron Corporation (NYSE:CVX) in its Q3 2021 investor letter:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publicly expressed concerns about both projects. According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
2. BP p.l.c. (NYSE:BP)
Huber Capital Management’s Stake Value: $10,312,000
Percentage of Huber Capital Management’s 13F Portfolio: 2.66%
Number of Hedge Fund Holders: 29
Headquartered in London, BP p.l.c. (NYSE:BP) produces natural gas, biofuels, wind power, and solar power, in addition to providing de-carbonization solutions and services. Huber Capital Management owns 377,300 BP p.l.c. (NYSE:BP) shares, worth $10.3 million, representing 2.66% of the fund’s third quarter 13F investments.
On November 9, BP p.l.c. (NYSE:BP) declared a $0.3276 per share interim dividend, in line with previous. The dividend was paid on December 17, to shareholders of record on November 12.
JPMorgan analyst Christyan Malek raised the price target on BP p.l.c. (NYSE:BP) to £590 from £570 and kept an Overweight rating on the shares on January 14.
According to the Q3 database of Insider Monkey, 29 hedge funds were bullish on BP p.l.c. (NYSE:BP), with stakes equalling $1.05 billion. In Q3 2021, Arrowstreet Capital held a prominent stake in BP p.l.c. (NYSE:BP), with 4.7 million shares worth $130.4 million.
1. Shell plc (NYSE:SHEL)
Huber Capital Management’s Stake Value: $11,561,000
Percentage of Huber Capital Management’s 13F Portfolio: 2.98%
Number of Hedge Fund Holders: 33
Shell plc (NYSE:SHEL) is a global energy company that supplies crude oil, natural gas, and natural gas liquids. The company was formerly known as Royal Dutch Shell plc and changed its name to Shell plc (NYSE:SHEL) in January 2022. Huber Capital Management owns 259,400 Shell plc (NYSE:SHEL) shares as of Q3 2021, worth $11.5 million, representing 2.98% of the fund’s total 13F securities.
On February 4, Cowen analyst Jason Gabelman raised the price target on Shell plc (NYSE:SHEL) to $58 from $53 and kept an Outperform rating on the shares. The company is exploring ways to upgrade its cash return framework, which could come with the Q2 earnings, the analyst told investors in a research note.
Shell plc (NYSE:SHEL) on February 3 declared a $0.48 per share quarterly dividend, in line with previous. The dividend is payable on March 28, to shareholders of record on February 18. The company also announced share buybacks of $8.5 billion for H1 2022, including $5.5 billion of Permian divestment proceeds.
In Q3 2021, Pzena Investment Management was one of the biggest Shell plc (NYSE:SHEL) stakeholders, with a $179.6 million position in the company. Overall, 33 hedge funds were long Shell plc (NYSE:SHEL) in the third quarter of 2021, down from 38 funds in the prior quarter.
Here is what Goehring & Rozencwajg Associates has to say about Shell plc (NYSE:SHEL) 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 it has already promised, sell assets, and prioritize return of cash to shareholders 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.”
You can also take a look at 10 Dividend Stocks Billionaire D. E. Shaw is Buying and Top 10 Stock Picks of NewGen Asset Management.
