7 Best Small-Cap Value Stocks to Buy According to Hedge Funds

1. Chord Energy Corporation (NASDAQ:CHRD)

Market Cap: $8.06 billion 

Forward P/E: 6.94

EPS Growth This Year: 0.70%

Number of Hedge Fund Holders: 56

Chord Energy (NASDAQ:CHRD) is an independent production and exploration company specializing in acquiring, developing, and producing natural gas liquids (NGL), natural gas, and crude oil. Its operations are concentrated in the Montana and North Dakota areas of the Williston Basin, targeting the Three Forks and Middle Bakken formations. The company’s land position stretches across approximately 1.3 million net acres in the Williston Basin, which is around 98% of the region.

Chord Energy (NASDAQ:CHRD) has an average daily production of 287,000 net barrels of oil equivalent per day (Boepd). It sells its natural gas, NGL, and crude oil production to marketers, refiners, and other purchasers with access to nearly rail and pipeline facilities. The company’s Q2 2024 oil volumes stood at the top end of guidance, primarily due to less downtime and well performance.

It completed the acquisition of Enerplus on May 31, and the strategic and financial benefits of the transaction are giving the company an attractive appeal. Enerplus integration brings top-tier assets in the basin core to the company. Chord Energy (NASDAQ:CHRD) is attempting to increase returns on these assets by applying techniques it developed over the past years, including reducing downtime, optimizing spacing, and longer laterals. The combined asset base holds the potential to support strong returns, efficient operations, sustainable free cash flow, and a peer-leading return of the capital program. This positions the company to achieve the greater than $200 million synergies target, up from the original estimate of $150 million.

The company holds a competitive advantage due to the evolving nature of the Williston Basin, which has the highest oil cut and its footprint extending across almost the entirety of the play. The land and regulatory environment are additional benefits in the region, positioning Chord Energy (NASDAQ:CHRD) for greater growth and profitability.

Overall, CHRD ranks first among the 7 best small-cap value stocks to buy according to hedge funds. While we acknowledge the potential of value stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CHRD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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