Billionaire Rob Citrone Loads Up On Energy Stocks

Discovery Capital Management is a Connecticut-based hedge founded in 1999 by billionaire Rob Citrone, whose net worth currently stands at $1.04 billion, according to Forbes’ real-time data on the richest people in the world. Mr. Citrone, one of many ‘Tiger Cubs’ who worked under the shadow of legendary investor Julian Robertson before starting his own fund, focuses on macro bets and invests in emerging markets with an emphasis on metrics such as liquidity, valuation multiples, and past and potential growth.

As of the latest 13F filing period, Discovery Capital manages a U.S. equity portfolio worth over $4.35 billion. Mr. Citrone’s fund ran into a rough patch for a couple of years, before making a comeback in late-2015. Nonetheless, Discovery Capital has started to face a decline in assets under management as investors redeem their money from the fund. That’s reflected in the value of its equity portfolio, which contained just under $9.00 billion in holdings a mere nine months earlier.

In this article, we’ll take a look at the latest 13F filing from Discovery Capital , which displayed its conviction in energy stocks as it seeks to finish out the 2016 year on a strong note. We’ll see which stocks from the sector it likes below.

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Callon Petroleum Company (NYSE:CPE)

– Shares Owned by Discovery Capital Management (as of June 30): 5.33 million

– Value of Discovery Capital Management’s Holding (as of June 30): $59.89 million

We’ll start with Mississippi-based oil and gas company Callon Petroleum Company (NYSE:CPE), which was added to Discovery Capital’s portfolio in the second quarter, as it acquired 5.33 million shares of the company. The company reported second quarter adjusted earnings of $0.05 per share, beating analysts’ estimates by $0.01, but revenue of $45.1 million was below analysts’ expectations of $46.6 million. Nonetheless, Callon’s stock is up by over 71% so far in 2016, thanks to the rebound in oil prices. 35 funds tracked by Insider Monkey were long Callon Petroleum Company (NYSE:CPE) at the end of the second quarter, up from 29 funds a quarter earlier.

QEP Resources Inc (NYSE:QEP)

– Shares Owned by Discovery Capital Management (as of June 30): 3.91 million

– Value of Discovery Capital Management’s Holding (as of June 30): $68.92 million

Discovery Capital bought 3.91 million shares of natural gas company QEP Resources Inc (NYSE:QEP) during the second quarter, valued at $68.92 million at the end of June. The company posted an adjusted loss of $0.23 per share for the second quarter, far better than analysts’ target of a $0.35 loss, though revenue came in at $333.7 million, lower than the expected $362.17 million. KLR Group recently raised its price target on QEP Resources’ shares to $32 from $31, following model revisions by the company, which included a 4% improvement to its capital productivity and a reduction in its lease operating expense. QEP Resources has operations in both the Williston Basin and Permian Basin. At the end of the second quarter, Vince Maddi and Shawn Brennan’s SIR Capital Management had amassed over 1.61 million shares of QEP Resources Inc (NYSE:QEP).

On the next page, we’ll discuss the rest of major moves in energy stocks executed by the ‘Tiger Cub’ during the second quarter.

Cimarex Energy Co (NYSE:XEC)

– Shares Owned by Discovery Capital Management (as of June 30): 662,064

– Value of Discovery Capital Management’s Holding (as of June 30): $78.99 million

Discovery Capital added Cimarex Energy Co (NYSE:XEC) to its portfolio during the second quarter, buying 662,064 shares of the company, worth $78.99 million on June 30. Cimarex Energy recently reportedsecond quarter EPS of $0.07, easily topping better the consensus target of $0.01. Earlier this month, Deutsche Bank AG upped its price target on Cimarex Energy shares to $140 from $120, while reaffirming a ‘Hold’ rating. The stock is up by over 48% so far this year. Of the 749 13F-filing funds in our database, 39 were bullish on Cimarex Energy Co (NYSE:XEC) on June 30, up from 32 a quarter earlier.

WPX Energy Inc (NYSE:WPX)

– Shares Owned by Discovery Capital Management (as of June 30): 8.73 million

– Value of Discovery Capital Management’s Holding (as of June 30): $81.31 million

Discovery Capital acquired approximately 8.73 million shares of Oklahoma-based energy company WPX Energy Inc (NYSE:WPX) in the three-month period ended June 30. The company recently reported a second quarter adjusted net loss of $0.28 per share, $0.07 worse than analysts’ consensus estimate. On a positive note, WPX Energy increased its full year oil production guidance to an average of 39-to-41 Mbbl per day, a 5% increase from its previous guidance of 37-to-39 Mbbl per day. WPX Energy Inc (NYSE:WPX)’s stock has gained over 106% year-to-date.

Halliburton Company (NYSE:HAL)

– Shares Owned by Discovery Capital Management (as of June 30): 1.88 million

– Value of Discovery Capital Management’s Holding (as of June 30): $85.19 million

Discovery Capital Management acquired over 1.88 million shares of the world’s largest oil field services company during the second quarter. The new position accounts for 1.96% of the value of the fund’s equity portfolio. Shares of Halliburton Company (NYSE:HAL) touched a new 52-week high of $46.90 last week, following a rally in crude prices and are up by over 32% so far this year. Halliburton Company (NYSE:HAL)’s revenue fell by 9% on a year-over-year basis in the second quarter of 2016. Back in May, the company scrapped its planned merger with Baker Hughes Incorporated (NYSE:BHI) following intense opposition from U.S. and European antitrust authorities. Halliburton will pay a $3.5-billion termination fee to Baker Hughes. Natixis Global Asset Management’s Harris Associates owns 5.65 million shares of Halliburton as of the end of the second quarter.

Disclosure: None