1. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 71
PE Ratio (as of March 7): 16.17
Exxon Mobil Corporation (NYSE:XOM) was the most popular undervalued energy stock to buy according to hedge funds according to our database, where 71 hedge funds held stakes worth $5.38 billion in the firm. This shows a positive trend from last quarter, where 64 hedge funds held combined positions worth $4.64 billion in Exxon Mobil Corporation (NYSE:XOM).
Based in Texas and founded in 1870, Exxon Mobil Corporation (NYSE:XOM) is an oil company with operations around the globe. On March 7, MKM Partners analyst John Gerdes reiterated a ‘Buy’ rating on the firm’s shares, citing a strong production outlook. Gerdes upped his firm’s price target on Exxon Mobil Corporation (NYSE:XOM) to $84 from $81 and holds that the energy company could generate around $40.2 billion of free cash flows in 2022, assuming approximately $21.6 billion in net capital expenditures for the year.
In the fourth quarter, Exxon Mobil Corporation (NYSE:XOM) recorded earnings per share of $2.05, which outperformed estimates by $0.11. Quarterly revenue of $84.97 billion was above analysts’ forecasts by $6.24 billion and signaled an increase of 82.56% year-on-year. As of March 7, shares of Exxon Mobil Corporation (NYSE:XOM) have surged 42.98% in the last 12 months, and 59.71% in the last 6 months.
Investment firm Goehring & Rozencwajg Associates talked about Exxon Mobil Corporation (NYSE:XOM) in its Q3 2021 investor letter. The fund said:
“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 publically 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.”
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