Hedge Funds Love These Five Energy Stocks

2. Anadarko Petroleum Corporation (NYSE:APC)

– Investors with Long Positions (as of December 31): 61

– Aggregate Value of Investors’ Holdings (as of December 31): $2.57 Billion

The number of smart money investors from our database with stakes in Anadarko Petroleum Corporation (NYSE:APC) declined to 61 from 70 during the October-December period, while the value of their stakes fell to $2.57 billion from $3.38 billion. The independent exploration and production company has seen its shares slid by 21% since the beginning of 2016. Earlier this month, Anadarko announced plans to sell $1.3 billion of assets through three separate deals, which include the forward sale of future royalty income from its natural soda ash interest, the divestiture of its East Chalk asset, and the sale of its 50.1% interest in the Maverick Basin gathering system. The company’s 2016 capital budget totals $2.8 billion, down 50% from the amount of capital investments made during 2015. Anadarko has lowered its 2016 capital spending, has undertaken cost cutting efforts, reduced its dividend and implemented monetizing efforts in the past months or so, with all these actions being aimed at improving the company’s financial health amid depressed market conditions. The company had total debt of $15.75 billion at the end of 2015, while its cash on hand and borrowing capacity amounted to $939 million and $4.75 billion, respectively. Jonathon Jacobson’s Highfields Capital Management owns 3.77 million shares of Anadarko Petroleum Corporation (NYSE:APC) as of December 31.

1. Exxon Mobil Corporation (NYSE:XOM)

Investors with Long Positions (as of December 31): 68

Aggregate Value of Investors’ Holdings (as of December 31): $3.08 Billion

Unexpectedly, the smart money sentiment towards Exxon Mobil Corporation (NYSE:XOM) was positive in the December quarter, as the number of hedge fund managers tracked by us with positions in the company increased to 68 from 61 quarter-on-quarter. Nonetheless, the value of those positions declined to $3.08 billion from $3.19 billion quarter-over-quarter. Just recently, Moody’s Investors Service reiterated the Aaa issuer and senior unsecured ratings of the largest publicly-held oil company, but slashed the rating outlook to negative from stable, citing expectations of negative free cash flow and weak cash flow-based leverage metrics. Exxon Mobil generated earnings of $16.15 billion during 2015, down from $32.52 billion in 2014. At the same time, the company paid shareholders $12.09 billion in dividends last year, which denotes a payout ratio of roughly 75%. More importantly, the company has increased its annual dividend for 33 consecutive years, which means that the odds of reaching a payout ratio above 100% are extremely high given that analysts expect Exxon to generate earnings of $10.5 billion in 2016. Meanwhile, Exxon shares are up by almost 5% year-to-date. Ken Fisher’s Fisher Asset Management cut its stake in Exxon Mobil Corporation (NYSE:XOM) by 2% during the December quarter to 5.39 million shares.

Disclosure: None