5 S&P Companies That Lost Hundreds of Millions in Q3

Although crude prices have soared since last February on the back of OPEC intervention and improving fundamentals, the rising prices haven’t managed to lift the earnings reports of every company in the sector into the green, at least according to GAAP conventions.

In this article, we’ll take a look at 5 S&P index companies that lost hundreds of millions of dollars during their latest quarter, all of which are energy companies: ConocoPhillips (NYSE:COP), Hess Corp. (NYSE:HES), Anadarko Petroleum Corporation (NYSE:APC), Baker Hughes Incorporated (NYSE:BHI), and EOG Resources Inc (NYSE:EOG). We’ll also use the latest 13F data to examine hedge fund sentiment towards each of the five stocks.

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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

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Hess Corp. (NYSE:HES)

– Number of Hedge Fund Shareholders (as of September 30): 37
– Total Value of Hedge Funds’ Holdings (as of September 30): $1.58 billion
– Hedge Funds’ Holdings as Percent of Float (as of September 30): 9.90%

For its third quarter, Hess Corp. (NYSE:HES) lost $339 million, or $1.12 per common share, versus a loss of $279 million a year earlier. Its adjusted net loss was slightly worse, coming in at $340 million for the period. Hess’ soft results were due to lower production and softer realized selling prices. Despite the soft third quarter, shares of Hess trade near their 52-week high, as crude prices have risen considerably from their third-quarter average. 37 funds in our system had a long position in Hess Corp. (NYSE:HES) at the end of the third quarter, unchanged from the end of the second quarter. Paul Singer‘s Elliott Management owned around 18.8 million Hess shares on September 30.

ConocoPhillips (NYSE:COP)

– Number of Hedge Fund Shareholders (as of September 30): 40
– Total Value of Hedge Funds’ Holdings (as of September 30): $1.33 billion
– Hedge Funds’ Holdings as Percent of Float (as of September 30): 3.10%

Like Hess, ConocoPhillips (NYSE:COP) also saw a drop in terms of its realized price per barrel. The company’s third-quarter realized price per BOE clocked in at $29.78, down from $32.87 per BOE in the third quarter of 2015. Due to the drop, ConocoPhillips reported a GAAP net loss of $1.1 billion, or $0.87 per share. Excluding special items, the giant E&P lost an adjusted $0.8 billion, or $0.66 per share, versus its third-quarter of 2015 adjusted net loss of $0.38 per share. Despite the red bottom-line, many shareholders have taken solace in the fact that management successfully achieved cash flow neutrality for the three-month period, with operating cash flow covering capital expenditures and the dividend. Of the 742 funds we track that filed 13Fs for the September reporting period, 40 were long $1.33 billion of ConocoPhillips (NYSE:COP) shares on September 30, down from 43 funds with $1.67 billion in holdings on June 30.

On the next page, we’ll examine the latest earnings reports from Baker Hughes, EOG Resources, and Anadarko Petroleum Corporation.

Baker Hughes Incorporated (NYSE:BHI)

– Number of Hedge Fund Shareholders (as of September 30): 42
– Total Value of Hedge Funds’ Holdings (as of September 30): $2.64 billion
– Hedge Funds’ Holdings as Percent of Float (as of September 30): 13.90%

Given that Brent didn’t really find its legs until recently, Baker Hughes Incorporated (NYSE:BHI) wasn’t able to charge its normalized rates for service contracts in Q3, and subsequently reported an operating loss of $321 million and a GAAP net loss of $1 per share. Although the formal number look bad, Baker Hughes’ management included $0.85 per share of adjusted items, yielding an adjusted loss of just $0.15 per share. While activity in the Gulf of Mexico and deepwater remained sluggish, the company expects fourth-quarter North American activity to be stronger. Baker Hughes’ merger with GE’s oil and gas division should also yield considerable synergies that should boost efficiency in the long run.

EOG Resources Inc (NYSE:EOG)

– Number of Hedge Fund Shareholders (as of September 30): 51
– Total Value of Hedge Funds’ Holdings (as of September 30): $1.28 billion
– Hedge Funds’ Holdings as Percent of Float (as of September 30): 1.40%

Although EOG Resources Inc (NYSE:EOG) has some of the choicest real estate in Texas’ Eagle Ford, Delaware Basin, and other plays, the company’s quality assets didn’t stop the independent from losing $190 million or $0.35 per share during the third quarter. EOG’s adjusted net loss was even worse, tipping the scales at $220.8 million, or $0.40 per share in the red. Despite the loss, EOG is also trading near its 52-week high, as some investors turn bullish due to the rising crude prices. The smart money was also optimistic during the third quarter. The number of funds in our database with long positions in EOG Resources Inc (NYSE:EOG) rose by 15 quarter-over-quarter to 51 at the end of September.

Anadarko Petroleum Corporation (NYSE:APC)

– Number of Hedge Fund Shareholders (as of September 30): 65
– Total Value of Hedge Funds’ Holdings (as of September 30): $3.9 billion
– Hedge Funds’ Holdings as Percent of Float (as of September 30): 7.90%

While Anadarko Petroleum Corporation (NYSE:APC) was one of the most popular energy stocks among the smart money set at the end of the third quarter (65 funds of the funds that Insider Monkey tracks held around $3.9 billion worth of its shares), the company nevertheless lost $830 million or $1.61 per share during the third quarter. Anadarko ended the quarter with around $4 billion in cash, and its management has accelerated activity in the Delaware Basin and the D-J Basin. With WTI on the other side of $50 per barrel, many investors hope that the future will be better than the recent past for Anadarko.

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