In this article, we will look at the top 10 stocks that make up anti-ESG investor Vivek Ramaswamy’s new energy ETF. If you want to skip reading about Vivek Ramaswamy and his thoughts on fossil fuels to generate energy, you can go directly to “Anti ESG” Investor Vivek Ramaswamy’s New ETF: Top 5 Stock Picks.
Vivek Ramaswamy is an Indian-American entrepreneur, investor, and political commentator. Mr. Ramaswamy holds an undergraduate degree in Biology from Harvard and a J.D. from Yale Law School. Mr. Ramaswamy has been active in the technology and healthcare sectors and has received recognition for his work. In 2007, he co-founded a software company, Campus Venture Network, that developed software and networking solutions for university entrepreneurs. Mr. Ramaswamy has also served as a partner and portfolio manager for QVT Financial’s biotech portfolio. In 2014, Mr. Ramaswamy founded two healthcare companies, Roivant Sciences, and Axovant Sciences. In 2015, Forbes India published an article about Vivek Ramaswamy to applaud him for his work in the healthcare industry. In 2022, Mr. Ramaswamy co-founded Strive Asset Management, an Ohio-based hedge fund that strives to rid corporate America of political interests and instead pursue corporations to drive shareholder value through better operations and management.
Vivek Ramaswamy was dubbed as an “anti-ESG” investor by Wall Street Journal recently due to his controversial views on impact investing and his hedge fund’s mission statement: “to restore the voices of everyday citizens in the American economy by guiding companies to focus on excellence over politics”. Mr. Ramaswamy has appeared multiple times on TV, where he has discussed his views on how fossil fuels are a major part of the U.S. energy sector and the U.S. economy, and that the push for oil companies to conform with ESG regulations is in fact not in the best interest of shareholders and companies themselves. This August, Vivek Ramaswamy launched the Strive U.S. Energy ETF (NYSEARCA:DRLL), an exchange-traded fund that employs a full replication technique to mirror the performance of the Solactive United States Energy Regulated Capped Index.
Mr. Ramaswamy appeared on CNBC’s Squawk Box, where the “anti-ESG” investor discussed his fund’s new product, the Strive U.S. Energy ETF (NYSEARCA:DRLL), and his views on U.S. energy. Here are some comments about fossil fuels, oil companies, and the ESG movement, from Vivek Ramaswamy:
“Over the last decade, what we’ve seen is large asset managers have mandated U.S. energy companies to produce less oil and to produce less natural gas. What that’s led to, is a generational energy crisis. A massive supply-demand imbalance in the United States, and around the world, for fossil fuels. Now the good news is that U.S. energy companies can actually capture that opportunity, but can only do that if they are liberated from these ESG mandates and these ESG constraints. That’s what we’re bringing to the table with Strive… What Strive is doing is delivering a new mandate, what I call the post-ESG mandate to the U.S. energy sector, to drill for more oil, to frack for more natural gas, to do whatever allows them to be more successful over the long run, without regard to political, social, cultural, or environmental agendas. And if they do it, I think that’s actually an opportunity over the next decade to see a renaissance of U.S. energy, trading not at a discount to the S&P 500, that these companies do today, I think in large part due to this ESG-linked investment consensus, but rather to trade as they have for much of the last 30 years, at a much higher multiple, closer to parity with the U.S. tech sector, closer to parity, or even in excess, of the rest of the S&P 500. And I think that’s an opportunity to not only unleash the potential of U.S. energy stocks but also more importantly to shore up American energy security in the process as well…
I think oil and gas companies should invest where they have a competitive advantage and should not be wasting money where they don’t have a competitive advantage… Even in other future hydrocarbon energy and sustainability plays, like in hydrogen, they have competitive advantages. They’re building pipelines. Carbon recapture, a conversation we should be having, is different from just wasting money, in my opinion, on wind and solar, where oil and gas companies have no inherent competitive advantage…
You talk about the energy transition, let’s talk about what that transition looks like. Less than 3.5% market share for fossil fuels over the last 30 years, and we only picked off the ‘lowest hanging fruit’… There is a debate today on whether or not there is a future for fossil fuels after 2030, I personally think the answer to that question is clear as day. Fossil fuels will be here to stay for a long time to come, and what the ESG investment consensus has done is caused investors to value these companies as though there is no fossil future after 2030, when in fact there is long-term value…”
Some of the most notable holdings of Vivek Ramaswamy’s new energy ETF include Occidental Petroleum Corporation (NYSE:OXY), Exxon Mobil Corporation (NYSE:XOM), and Chevron Corporation (NYSE:CVX).
Source: Sedgedorrit
Photo of Vivek Ramaswamy at The Future of Biomedical Research in Europe Basel Conference in 2017. CC BY-SA 4.0 https://en.wikipedia.org/wiki/Vivek_Ramaswamy#/media/File:Vivek_Ramaswamy_at_The_Future_of_Biomedical_Research_in_Europe_Basel_Conference_2017.jpg
Our Methodology
We reviewed Strive’s U.S. Energy ETF (NYSEARCA:DRLL) to determine the stocks for this article. We have included the top ten holdings of the exchange-traded fund and ranked them in increasing order of their portfolio concentration. Along with each stock, we have also mentioned the analyst rating and hedge fund sentiment for it. We derived the hedge fund sentiment from Insider Monkey’s database, which as of Q2 2022, tracks roughly 900 elite hedge funds.
Vivek Ramaswamy’s New ETF: Top 10 Stock Picks
10. Exelon Corporation (NASDAQ:EXC)
Percentage of Strive U.S. Energy ETF’s Portfolio: 2.5%
Number of Hedge Fund Holders: 32
Exelon Corporation (NASDAQ:EXC) is a utility services holding company that generates and supplies energy primarily in the United States and Canada. The company owns nuclear, fossil, wind, hydroelectric, biomass, and solar power facilities. As of September 8, Excelon Corporation (NASDAQ:EXC) has gained 26.49% over the past twelve months and is offering a forward dividend yield of 2.99%.
Wall Street is bullish on Excelon Corporation (NASDAQ:EXC). On August 31, Mizuho analyst Paul Fremont raised his price target on Exelon Corporation (NASDAQ:EXC) to $47 from $46 and maintained a Buy rating on the shares.
At the close of Q2 2022, 32 hedge funds were bullish on Exelon Corporation (NASDAQ:EXC) and held stakes worth $1.67 billion in the company. The stock makes up 2.5% of Strive Asset Management’s energy ETF.
Investment management firm, ClearBridge Investments, mentioned Exelon Corporation (NASDAQ:EXC) in its first-quarter 2022 investor letter. Here is what the firm had to say:
“U.S. electric utility Exelon (NASDAQ:EXC) was also a top contributor. Exelon is a pure transmission and distribution regulated utility business serving millions of electric and gas customers across Delaware, Illinois, Maryland, New Jersey, Pennsylvania and the District of Columbia. Shares outperformed along with the utilities sector; Exelon is also starting to be viewed as a premium name after its recently completed spin-off of power generation business Constellation Energy (NASDAQ:CEG).”
9. Valero Energy Corporation (NYSE:VLO)
Percentage of Strive U.S. Energy ETF’s Portfolio: 2.6%
Number of Hedge Fund Holders: 43
Valero Energy Corporation (NYSE:VLO) is an oil and gas refining company that manufactures and sells petrochemical products in the United States, Canada, the United Kingdom, Ireland, and international markets. The company does business through three segments: Refining, Renewable Diesel, and Ethanol. As of September 8, the stock has gained 76% over the past twelve months.
Valero Energy Corporation (NYSE:VLO) is currently trading at bargain levels. As of September 8, the stock has a trailing twelve-month PE ratio of 6.47 and is offering a forward dividend yield of 3.48%, which the company supports with free cash flows of $8.6 billion.
Wall Street analysts see material upside to Valero Energy Corporation (NYSE:VLO). On August 16, Barclays analyst Theresa Chen raised her price target on Valero Energy Corporation (NYSE:VLO) to $139 from $133 and maintained a buy-side Overweight rating on the shares. On August 24, Piper Sandler analyst Ryan Todd raised his price target on Valero Energy Corporation (NYSE:VLO) to $150 from $142 and reiterated an Overweight rating on the shares.
At the end of Q2 2022, 43 hedge funds were long Valero Energy Corporation (NYSE:VLO) and held stakes worth $759.7 million in the company. This is compared to 47 positions in the preceding quarter with stakes worth $438 million.
Valero Energy Corporation (NYSE:VLO) is among the top holdings of Strive Asset Management’s energy ETF and accounts for 2.6% of its portfolio. Among the top 5 holdings of the ETF, we see Occidental Petroleum Corporation (NYSE:OXY), Exxon Mobil Corporation (NYSE:XOM), and Chevron Corporation (NYSE:CVX).
8. Marathon Petroleum Corporation (NYSE:MPC)
Percentage of Strive U.S. Energy ETF’s Portfolio: 2.8%
Number of Hedge Fund Holders: 50
Marathon Petroleum Corporation (NYSE:MPC) is an integrated downstream energy company that primarily serves in the United States. The company operates through two business segments: Refining & Marketing, and Midstream. Marathon Petroleum Corporation (NYSE:MPC) is cash rich and is also trading at bargain levels. As of September 8, the stock is trading at a PE ratio of 6.8 and is offering a forward dividend yield of 2.36%, which the company backs with more than $10 billion of free cash flows.
On August 2, Marathon Petroleum Corporation (NYSE:MPC) announced earnings for the second quarter of fiscal 2022. The company reported earnings per share of $10.61 and beat estimates by $2.11. The company’s revenue for the quarter amounted to $54.24 billion, up 81.8% year over year, and outperformed expectations by $10 billion. As of September 8, the stock has soared 72.58% over the past twelve months.
On August 16, Barclays analyst Theresa Chen raised her price target on Marathon Petroleum Corporation (NYSE:MPC) to $112 from $94 and reiterated an Overweight rating on the shares.
At the close of the second quarter of 2022, 50 hedge funds disclosed ownership of stakes in Marathon Petroleum Corporation (NYSE:MPC). The total value of these stakes amounted to $2.72 billion, up from $2.51 billion in the previous quarter with 43 positions. The hedge fund sentiment for the stock is positive.
7. Pioneer Natural Resources Company (NYSE:PXD)
Percentage of Strive U.S. Energy ETF’s Portfolio: 2.9%
Number of Hedge Fund Holders: 56
On August 2, Pioneer Natural Resources Company (NYSE:PXD) announced earnings for the fiscal second quarter of 2022. The company reported earnings per share of $9.36 and beat estimates by $0.56. The company reported a revenue of $6.92 billion, up 102.4% year over year, and ahead of Wall Street consensus by $101.3 million. Shares of Pioneer Natural Resources Company (NYSE:PXD) have surged 62% over the past twelve months, as of September 8.
Pioneer Natural Resources Company (NYSE:PXD) is an undervalued energy play. As of September 8, the stock has a trailing twelve-month PE ratio of 9.64 and is offering a strong dividend yield of 8.68%, which the company supports with free cash flows of $6.2 billion.
On August 18, Truist analyst Neal Dingmann revised his price target on Pioneer Natural Resources Company (NYSE:PXD) to $240 from $247 and reiterated a Hold rating on the shares.
At the end of Q2 2022, 56 hedge funds were long Pioneer Natural Resources Company (NYSE:PXD) and held stakes worth approximately $696 million.
Here is what Carillon Tower Advisers had to say about Pioneer Natural Resources Company (NYSE:PXD) in its first-quarter 2022 investor letter:
“Pioneer Natural Resources (NYSE:PXD) performed well in a strong energy sector. Pioneer stood out recently with a pledge to return a large majority of free cash flow to shareowners through dividends and stock buybacks, and ended hedging to give shareowners more earnings and dividend potential should oil and gas prices continue to rise.”
6. Schlumberger Limited (NYSE:SLB)
Percentage of Strive U.S. Energy ETF’s Portfolio: 3.0%
Number of Hedge Fund Holders: 64
Schlumberger Limited (NYSE:SLB) is a leading provider of technology solutions for the energy industry. The company has operations worldwide and operates through four business segments: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems. At the close of the second quarter of 2022, 64 hedge funds held stakes in Schlumberger Limited (NYSE:SLB), up from 58 positions in the previous quarter. The total stakes of these hedge funds amounted to $2.31 billion.
Wall Street analysts are bullish on Schlumberger Limited (NYSE:SLB). On July 25, Cowen analyst Marc Bianchi raised his price target on Schlumberger Limited (NYSE:SLB) to $49 from $47 and reiterated a buy-side Outperform rating on the shares. On July 27, Benchmark analyst Douglas Becker upgraded Schlumberger Limited (NYSE:SLB) to Buy from Hold and reiterated his price target of $55.
As of September 8, Schlumberger Limited (NYSE:SLB) has gained 42.84% over the past twelve months and is offering a forward dividend yield of 1.90%, which the company backs with solid free cash flows of $2.1 billion.
Like Occidental Petroleum Corporation (NYSE:OXY), Exxon Mobil Corporation (NYSE:XOM), and Chevron Corporation (NYSE:CVX), Schlumberger Limited (NYSE:SLB) is a notable holding of Strive Asset Management’s new energy ETF and represent 3% of its top 10 holdings.
Here is what ClearBridge Investments had to say about Schlumberger Limited (NYSE:SLB) in its “Global Growth Strategy” second-quarter 2022 investor letter:
“We further added to our positioning for the accelerating energy transition with the purchase of Schlumberger Limited (NYSE:SLB), a global provider of oilfield services. As a technology leader, Schlumberger should generate strong free cash flow over the next few years as the industry recovers, using its excess cash to gain market share from smaller players and to expand into new areas of growth. Through its scale, presence, partnerships and technology, Schlumberger is targeting expansion into new large addressable markets such as carbon capture, hydrogen, geothermal and lithium extraction.”
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Disclosure. None. “Anti ESG” Investor Vivek Ramaswamy’s New ETF: Top 10 Stock Picks is originally published on Insider Monkey.
