1. Hess Corporation (NYSE: HES)
Number of Hedge Fund Holders: 26
Hess Corporation (NYSE: HES) is a global energy company. It is ranked first on our list of 10 stocks to buy to profit from post-COVID economic recovery. The stock has returned 82% to investors in the past year. After a torrid 2020, with oil prices at record lows, the firm has bounced back as travel resumes and oil prices pick up again, with further growth expected as airlines resume operations and international borders reopen.
Hess Corporation (NYSE: HES) posted earnings for the first quarter of 2021 on April 8, reporting earnings per share of $0.82, beating market predictions by $0.47. The revenue over the period was close to $2 billion, up 40% year-on-year.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Hess Corporation (NYSE: HES) with 3.3 million shares worth more than $235 million.
In its Q2 2020 investor letter, Massif Capital, an asset management firm, highlighted a few stocks and Hess Corporation (NYSE: HES) was one of them. Here is what the fund said:
“We took a short position in Hess (HES) during the first quarter due to what we believed to be a weakness in their assertion that the Bakken would serve as a cash engine, along with their Gulf of Mexico assets, to pay for the development of their offshore Guyana fields. Our analysis suggested that not only was their fracking in the Bakken unprofitable but that it was unlikely ever to be so. The market very quickly told us that although we might be right in our analysis of the fundamentals, it did not care. We suspect that much of this has to do with the fact that Hess had hedged nearly 100% of their production in 2020 during the relatively high priced 2019 period, but we cannot be certain. Since we closed out the position, the stock has rallied a further 45%. We take this as directional evidence (perhaps) of a good decision. Hess contributed -0.19% to the portfolio during the quarter.
We have mostly avoided shorting oil companies in the last few years. The opportunity is appealing but extremely tricky to evaluate. Hess remains an interesting short. We have little confidence in the long-term viability of operations in the Bakken, and Hess remains a large player. Yet as the firm moves further along in their development and monetization of assets in Guyana, the weight of the Bakkens failure to play a meaningful role in producing positive free cash flow becomes increasingly difficult to determine by looking at the financials and perhaps less significant to the market. One thing that seems increasingly true of the environment we are investing in is that bad capital allocation by management teams can be easily forgiven if there is plenty of liquidity, even if access to liquid capital imperils long-term solvency.”
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