Below we present the list of Citadel Stock Holdings: 5 Biggest Energy Stocks. For our methodology and a more comprehensive list please see Citadel Stock Holdings: 10 Biggest Energy Stocks.
5. PPL Corporation (NYSE:PPL)
Value of Citadel Investment Group’s 13F Position: $182 million
Number of Hedge Fund Shareholders: 28
PPL Corporation (NYSE:PPL) tied its all-time low in hedge fund ownership at the end of 2021, but there was a 47% rise in the number of funds long PPL during the first three quarters of 2022. Ken Griffin’s Citadel Investment was already a PPL shareholder heading into 2022 but added significantly to its position during the first three quarters of the year, raising its stake from just 93,822 shares to nearly 7.19 million.
Like Vistra Energy, PPL Corporation (NYSE:PPL) also has ambition plans to achieve carbon neutrality by 2050 through greatly enhancing its renewable energy capacity. To that end, the company completed its acquisition of natural gas utility The Narragansett Electric Company in May, which further reduces its exposure to coal.
PPL Corporation (NYSE:PPL) was forced to slash its dividend payout by 51% in early 2022 after missing earnings estimates and with the goal of achieving a 60% to 65% payout ratio. It raised its dividend by 12.5% later in the year, and PPL shares still yield a solid 3.08%. Given its net debt to EBITDA has been significantly lowered in recent years, the company’s dividend should be relatively safe from here on out.
4. Public Service Enterprise Group Incorporated (NYSE:PEG)
Value of Citadel Investment Group’s 13F Position: $185 million
Number of Hedge Fund Shareholders: 31
Citadel owns the largest stake in Public Service Enterprise Group Incorporated (NYSE:PEG) among the funds tracked by Insider Monkey’s database, holding 3.29 million shares as of September 30, up by 24% from a quarter earlier. Overall hedge fund ownership of PEG dipped slightly during Q3 but has trended up over the past year and a half.
Public Service Enterprise Group Incorporated (NYSE:PEG) is the holding company for natural gas and electricity provider Public Service Electric & Gas (PSE&G), which operates primarily in New Jersey, Long Island, and Pennsylvania. Like many of the energy companies on this list, it’s also moving towards a clean energy future, having sold off its fossil-fuel plants.
According to Wells Fargo analyst Neil Kalton, PEG was one of the top performing utilities between 2011 and 2021, growing EPS at a 12% CAGR. The analyst believes the company can continue to grow EPS at a 6% to 7% annual rate through 2025.
Carillon Tower discussed some of the reasons for Public Service Enterprise Group Incorporated (NYSE:PEG)’s recent share price underperformance in its Q3 2022 investor letter:
“Public Service Enterprise Group Incorporated (NYSE:PEG) produces and distributes electricity and natural gas to customers in New Jersey. Concerns that negative equity and fixed income returns will impact pension funding requirements weighed on the company’s share price.”
3. FirstEnergy Corp. (NYSE:FE)
Value of Citadel Investment Group’s 13F Position: $194 million
Number of Hedge Fund Shareholders: 41
Citadel owns 5.25 million FirstEnergy Corp. (NYSE:FE) as of September 30, up by 12% quarter-over-quarter and trailing only the substantial position held by billionaire activist investor Carl Icahn, whose Icahn Capital holds just under 19 million FE shares and has two seats on the company’s board of directors.
In an effort to improve its balance sheet, FirstEnergy Corp. (NYSE:FE) sold part of its transmission business for $2.4 billion earlier this year and is considering another asset sale in the near future. It’s possible the company, which has been rocked by a corruption scandal that lead to the departure of former President and CEO Steven Strah, may even consider putting itself up for sale. The company currently owns ten electric utilities that serve close to 6 million customers.
Guggenheim analyst Shahriar Pourreza lowered the firm’s price target on FirstEnergy Corp. (NYSE:FE) to $34 in October, down from $43, and kept a ‘Neutral’ rating on FE shares. The revision was largely based on a lowering of the broader utility sector’s baseline valuation in light of rate hikes.
2. Phillips 66 (NYSE:PSX)
Value of Citadel Investment Group’s 13F Position: $198 million
Number of Hedge Fund Shareholders: 35
Citadel nearly tripled the size of its stake in Phillips 66 (NYSE:PSX) during Q3, ending the quarter with 2.45 million shares. Hedge fund ownership of PSX hit a two-year high during the first quarter of 2022 but fell by 19% over the following two quarters.
One of the 5 Best Oil Refinery Stocks To Buy is Phillips 66 (NYSE:PSX), which plans to increase its capital spending by about 6% in 2023 to $3.14 billion, including heightened spending on renewable fuels and pipeline projects. Among other initiatives, the company plans to convert one of its refineries into a plant that can produce diesel from animal fats and cooking oils.
Piper Sandler analyst Ryan Todd has an ‘Overweight’ rating on Phillips 66 (NYSE:PSX) shares along with a $137 price target and believes the broader energy sector is in good shape even after two years of outperformance given its more disciplined capital allocation and the ongoing supply constraints plaguing the market. The analyst believes refiners in particular will have another banner year in 2023, enjoying margin performance similar to what they enjoyed in 2022.
1. Chevron Corporation (NYSE:CVX)
Value of Citadel Investment Group’s 13F Position: $253 million
Number of Hedge Fund Shareholders: 68
Topping the list of Citadel’s biggest energy holdings is Chevron Corporation (NYSE:CVX), which is also a favored energy stock of industry titans like Warren Buffett and Ken Fisher. Citadel raised its stake in CVX by 290% during Q3, elevating its share count to 1.76 million. There’s been a 55% jump in hedge fund ownership of Chevron since early 2021, with the stock hitting an all-time high on that front during the latest quarter.
Buffett, Fisher, and Griffin are likely big fans of Chevron Corporation (NYSE:CVX) due to the breadth of its upstream and downstream operations, which insulates it from oil price fluctuations like few other energy stocks. The company also has one of the strongest balance sheets in the industry and pays out a healthy dividend that yields 3.16%. Chevron’s net income grew by 175% year-over-year during the first nine months of 2022 to hit $29 billion, and the company appears poised for another strong showing in 2023.
The Diamond Hill Long-Short Fund noted Chevron Corporation (NYSE:CVX) as one of its top Q1 contributors in its Q1 2022 investor letter:
“Other top contributors in Q1 included multinational energy company Chevron Corp. (NYSE:CVX). The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”
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