Goehring & Rozencwajg Associates, an investment management firm, published its “Natural Resource Market Commentary” third-quarter 2021 investor letter – a copy of which can be downloaded here. In its letter, the fund talked about the energy crisis unfolding across Europe, Asia, and South America. The energy-heavy Goldman Sachs Commodity Index rose 5.2% on a total-return basis, while the Roger International Commodity Index, with its higher exposure to metals and agriculture, rose 6.2%. The S&P North American Natural Resources Sector Index, which is very heavily weighted to North American energy stocks, fell 2.5%. The S&P Global Natural Resource Index, which has significantly more metal and agricultural stock exposure, fell 3.1%. The broad market, as measured by the S&P 500 Stock Index, rose by 0.6%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Goehring & Rozencwajg Associates, in its Q3 2021 investor letter, mentioned Exxon Mobil Corporation (NYSE: XOM) and discussed its stance on the firm. Exxon Mobil Corporation is an Irving, Texas-based natural gas company with a $250.4 billion market capitalization. XOM delivered a 43.52% return since the beginning of the year, while its 12-month returns are up by 43.45%. The stock closed at $59.16 per share on December 20, 2021.
Here is what Goehring & Rozencwajg Associates has to say about Exxon Mobil Corporation in its Q3 2021 investor letter:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publically expressed concerns about both projects.
According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
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Based on our calculations, Exxon Mobil Corporation (NYSE: XOM) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. XOM was in 64 hedge fund portfolios at the end of the third quarter of 2021, compared to 68 funds in the previous quarter. Exxon Mobil Corporation (NYSE: XOM) delivered a 10.29% return in the past 3 months.
In September 2021, we also shared another hedge fund’s views on XOM in another article. You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q3 page.
Disclosure: None. This article is originally published at Insider Monkey.
