Below we take a look at why Hedge Funds Were Right About These 5 Soaring Stocks. For our methodology and a more comprehensive list please see Hedge Funds Were Right About These 10 Soaring Stocks.
5. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Shareholders: 84
Year-to-Date Returns: 52.9%
Hedge fund ownership of Exxon Mobil Corporation (NYSE:XOM) hit an all-time high in the first quarter after rising by 25% over the prior two quarters. Crispin Odey’s Odey Asset Management Group and Ray Dalio’s Bridgewater Associates are among the prominent money managers that have built stakes in XOM in recent quarters.
Exxon Mobil Corporation (NYSE:XOM), which is the world’s largest refiner with global capacity of 4.6 million barrels per day, is being richly rewarded for its past investments in cost reductions to fully capitalize on sky-high commodity prices. Exxon Mobil’s immense Q2 adjusted earnings of $17.6 billion blew away estimates, and were nearly $13 billion greater than its windfall from the year-ago quarter.
Exxon Mobil Corporation (NYSE:XOM) shares were recently given a price target of $123 by Bank of America analyst Doug Leggate, up from $120, while the analyst’s ‘Buy’ rating on XOM shares remained intact. Leggate believes Exxon Mobil will continue to lead its fellow oil majors in free cash flow trajectory, and that the company’s share buybacks are likely to intensify after the company’s reaches its cash balance targets.
4. Nabors Industries Ltd. (NYSE:NBR)
Number of Hedge Fund Shareholders: 26
Year-to-Date Returns: 55.9%
Hedge fund ownership of Nabors Industries Ltd. (NYSE:NBR) had fallen to all-time lows in recent quarters, but rebounded in the first quarter, more than doubling. Cliff Asness’ AQR Capital Management and Jeffrey Gendell’s Tontine Asset Management were among the funds to buy NBR stakes during Q1.
One of the world’s largest operators of land rigs, Nabors Industries Ltd. (NYSE:NBR) is in a strong position to capitalize on favorable market conditions that should results in great rig activations, higher dayrate averages, and improved margins.
The Miller Value Partners Deep Value Strategy believes Nabors Industries Ltd. (NYSE:NBR) shares will continue to benefit from the company paying down its debt, having this to say about stock in its Q1 2022 investor letter:
“During the quarter, more than half of the portfolio weighting were in holdings that were up in excess of 25%. Our two largest positive contributors includes Nabors Industries (NYSE:NBR), up more than 80%. Nabors Industries continues to benefit from the rise in oil and gas prices as the industry emerges from a multi-year trough. The company appears well positioned to be a significant beneficiary over the coming years from higher oil prices and greater global demand for their higher spec land rigs. In addition, the company’s proprietary technology offerings have the potential to create significant long-term value. Even after the recent positive move, Nabors remains at a sizable valuation discount to their peers. Nabors pre-split share price at quarter end was only $3/share; historically when oil prices reached current levels, Nabors share price has been in excess of $10/share. Nabors should continue to benefit from paying down debt and free cash flow returning to normalized levels over the next couple of years.”
3. Range Resources Corporation (NYSE:RRC)
Number of Hedge Fund Shareholders: 36
Year-to-Date Returns: 79.9%
Range Resources Corporation (NYSE:RRC) shares have skyrocketed by 80% year-to-date, surely pleasing the numerous hedge funds that added RRC to their portfolios over the previous two quarters. Among them were Joel Greenblatt’s Gotham Asset Management and Lee Munder’s Lee Munder Capital Group. All told, there was a 44% increase in the number of funds long RRC between Q4 2021 and Q1 2022.
Range Resources Corporation (NYSE:RRC) reported Q2 production of 2.1 billion cubic feet equivalent per day, in line with its end-of-2021 production. The independent exploration and production company, which currently operates entirely in the Marcellus Shale in Pennsylvania, has proved reserves of 17.8 trillion cubic feet equivalent, which would sustain that level of production for nearly 25 years.
Thanks to its rapidly improving balance sheet, Range Resources Corporation (NYSE:RRC) is expected to boost share repurchases in the near-term, shares which are now 80% more valuable than they were at the end of 2021. With its shares soaring, several valuation metrics have also hit multi-year highs, including the company’s price to sales (1.66x), price to book (4.22x), and price to cash flow (6.41x).
2. Helmerich & Payne, Inc. (NYSE:HP)
Number of Hedge Fund Shareholders: 29
Year-to-Date Returns: 83.9%
There’s been an 81% surge in hedge fund ownership of Helmerich & Payne, Inc. (NYSE:HP) over the past year, which is bested by the stock’s 84% gains in 2022. Mark Schlueter and Jonathan Lamensdorf’s Sagefield Capital and Michael Gelband’s ExodusPoint Capital are among the recent buyers of the stock.
Helmerich & Payne, Inc. (NYSE:HP) is the second land rig operator to land in the top five thanks to rising rig demand and improved pricing power that have electrified the sector’s results. Helmerich and Payne’s fiscal Q3 revenue of $550 million topped estimates by $30 million, while its adjusted EPS of $0.05 was in line.
Potential investors shouldn’t be frightened off by Helmerich & Payne, Inc. (NYSE:HP) or Nabors’ share price appreciation this year according to Barclays analyst J. David Anderson. He states that while some believe the U.S onshore market has already peaked, it is in reality just getting warmed up, with a multi-year up-cycle likely in store. Anderson has a $52 price target on HP shares and recently upgraded them to ‘Overweight’ from ‘Equal Weight’.
1. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Shareholders: 72
Year-to-Date Returns: 112%
Topping the list with 112% gains year-to-date is Occidental Petroleum Corporation (NYSE:OXY), which has seen an unprecedented eight straight quarters of rising hedge fund ownership. Overall ownership of the stock has more than doubled during that two-year period. Legendary investor Warren Buffett is among the new owners of OXY, having taken a massive 137 million-share stake in the company during Q1.
Despite widespread inflation across the industry that has affected everything from steel prices to fuel), Occidental Petroleum Corporation (NYSE:OXY) has been one of the exploration and production companies that hasn’t raised its capital spending guidance this year. The firm is guiding towards the high end of its $3.9 billion to $4.3 billion range.
Occidental Petroleum Corporation (NYSE:OXY) pulled in $10.68 billion in revenue in Q2 as well as $3.16 in EPS, both of which topped estimates by a fair amount. The company, which has 3.5 billion barrels of oil equivalent of net proved reserves as of the end of last year, achieved record quarterly EBITDA of $4.2 billion during the latest quarter.
For more of the latest stock picks worth considering for your portfolio, check out 10 Stocks That Will Benefit from Record Breaking Temperatures and 12 Best Stocks Under $50.
Disclosure: None.
