Energy-Focused Wexford Capital Reveals Top Stock Picks Dominated by MLPs

Wexford Capital LP is an investment firm with $2.7 billion of assets under management founded by Charles Davidson and Joseph Jacobs in 1994. Wexford currently manages three hedge funds that have an aggregate $1.5 billion in assets under management: the opportunistic/global macro Wexford Spectrum Fund; the multi-strategy credit oriented Wexford Credit Opportunities Fund; Wexford Catalyst Fund, which is focused on energy, natural resources and industrials. Wexford Capital LP increased its exposure to U.S. equities quite significantly during the first quarter of 2016, as the fund added 50 new positions to its portfolio and increased 24 existing positions during the quarter. Nonetheless, the firm sold out a number of 14 positions in the quarter and reduced 17 existing positions. Considering Wexford’s seemingly bullish stance on the U.S. stock market, it would be a great idea to have a look at the fund’s top five equity holdings at the end of the March quarter.

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#5. Sunoco LP (NYSE:SUN)

– Number of shares owned by Wexford Capital as of March 31: 447,424

– Value of Wexford Capital’s holding as of March 31: $14.82 Million

Wexford Capital LP upped its stake in Sunoco LP (NYSE:SUN) by 51,822 shares or approximately 13% during the March quarter to 447,424 shares. The increased stake was valued at $14.82 million on March 31 and accounted for 2.9% of Wexford’s entire portfolio. The gas station and convenience store operator has seen its shares declined by 15% in value since the beginning of 2016. The company’s total revenue for the first quarter of 2016 was $3.20 billion, a massive dip from the $4.34 billion top-line figure recorded for the same quarter of 2015. The decrease was mainly driven by a major decrease in the sales price per wholesale motor fuel gallon, as well as a decrease in wholesale motor fuel gallons sold. Nonetheless, Sunoco’s net income increased to $62.01 million from $49.31 million. The stock is priced at 12.4-times expected earnings, above the forward PE multiple of 10.2 for the oil and gas refining and marketing sector. Murray Stahl’s Horizon Asset Management reported ownership of 26,350 shares of Sunoco LP (NYSE:SUN) through its 13F for the first quarter.

#4. Energy Transfer Partners LP (NYSE:ETP)

– Number of shares owned by Wexford Capital as of March 31: 704,465

– Value of Wexford Capital’s holding as of March 31: $22.78 Million

Wexford Capital was also bullish on Sunoco LP’s owner, Energy Transfer Partners LP (NYSE:ETP), during the first three months of 2016, as the investment firm increased its exposure to ETP by 233,135 shares or roughly 49%. The quarter-end stake, which comprised 704,465 shares, was worth $22.78 million at the end of March. Various trustworthy news outlets said the U.S. pipeline company has held discussions about a possible sale of gas station- and convenience store-operator Sunoco, but those discussions did not advance because of disagreements between the parties involved on the valuation of Sunoco. In September 2015, Energy Transfer Partners inked a multi-billion-dollar agreement to acquire Williams Companies Inc. (NYSE:WMB), but the acquirer seeks to restructure or escape the seemingly expensive acquisition after plummeting oil prices hit nearly each corner of the energy industry. Shares of Energy Transfer Partners are up 3% year-to-date. David Atterbury’s Whetstone Capital Advisors acquired a new stake of nearly 400,000 shares of Energy Transfer Partners LP (NYSE:ETP) during the March quarter.

#3. EnLink Midstream Partners LP (NYSE:ENLK)

– Number of shares owned by Wexford Capital as of March 31: 2.18 Million

– Value of Wexford Capital’s holding as of March 31: $26.31 Million

Wexford Capital LP had 2.18 million shares of EnLink Midstream Partners LP (NYSE:ENLK) at the end of March, up 255,000 shares or around 13% quarter-on-quarter. The 2.18 million-share stake was priced at $26.31 million on March 31 and made up 5.1% of the fund’s equity portfolio. EnLink Midstream Partners’ business operations mainly involve providing midstream energy services such as gathering, transmission, processing, brine services and marketing to producers of natural gas, NGLs, crude oil and condensate. The company’s gross operating margin for the first quarter increased 7.2% year-over-year to $303.5 million, primarily due to a series of acquisitions. Meanwhile, the increase was partly offset by both volume and price declines. EnLink Midstream Partners currently pays out a distribution of $0.39 per unit, which equates to a current dividend yield of 11.18%. The master limited partnership has seen its market value decline by 16% since the start of the year. Matthew Hulsizer’s PEAK6 Capital Management owns 4,094 units of EnLink Midstream Partners LP (NYSE:ENLK) as of March 31.

#2. AerCap Holdings N.V. (NYSE:AER)

– Number of shares owned by Wexford Capital as of March 31: 863,219

– Value of Wexford Capital’s holding as of March 31: $33.46 Million

Wexford Capital did shy away from showing their bullish views on AerCap Holdings N.V. (NYSE:AER) during the first quarter, as the fund boosted the AerCap stake by a massive amount of 517,489 shares to 863,219 shares. This implies an increase of 149% quarter-on-quarter, with the quarter-end stake being valued at $33.46 million. The Netherlands-incorporated company is the largest independent aircraft leasing company in the world, with roughly 1,670 owned, managed or on order aircraft in its portfolio. The company signed lease agreements for 100 aircraft in the first quarter of 2016, bought six aircraft and completed sale and part-out transactions for 25 aircraft. As a result, AerCap’s basic lease rents for the first quarter of 2016 declined to $1.14 billion from a slightly higher figure of $1.16 billion for the same period in 2015. The shares of AerCap are down 14% year-to-date despite having gained 26% in the past three months. Gifford Combs’ Dalton Investments added a 498,000-share position in AerCap Holdings N.V. (NYSE:AER) to its pool of holdings during the first quarter.

#1. Enterprise Products Partners L.P. (NYSE:EPD)

– Number of shares owned by Wexford Capital as of March 31: 1.37 Million

– Value of Wexford Capital’s holding as of March 31: $33.66 Million

Enterprise Products Partners L.P. (NYSE:EPD) is the largest position in Wexford’s portfolio as of the end of the March quarter, being valued at $33.66 million. Wexford Capital increased its exposure to the pipeline company by 549,213 shares or 67% during the January-to-March period to nearly 1.37 million shares. Enterprise Products Partners, one of the largest publicly-traded master limited partnerships and a leading provider of midstream energy services, was recently started as ‘Outperform’ at Bernstein, with a price target of $33. Bernstein’s analysts consider Enterprise Products Partners as one of the best MPLs. The MPL currently makes a quarterly distribution of $0.395 per common unit, which implies a $1.58 annual distribution per unit and a dividend yield of 5.97%. Analysts at Merrill Lynch also recently raised their price target on the MPL to $30 from $28. Adam Usdan’s Trellus Management Company has 45,000 common units of Enterprise Products Partners L.P. (NYSE:EPD) as of March 31.

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