Steel City Capital, an investment management firm, published its first-quarter 2022 investor letter – a copy of which can be downloaded here. Steel City Capital, LP (the “Partnership”) was essentially flat in the first quarter of 2022, net of fees and expenses. The Partnership declined 1.4% in April, bringing YTD’22 results to a negative 1.5%. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Steel City Capital mentioned Evolution Petroleum Corporation (NYSE:EPM) and explained its insights for the company. Founded in 1994, Evolution Petroleum Corporation (NYSE:EPM) is a Houston, Texas-based oil & gas company with a $231.7 million market capitalization. Evolution Petroleum Corporation (NYSE:EPM) delivered a 36.24% return since the beginning of the year, while its 12-month returns are up by 91.11%. The stock closed at $6.88 per share on May 05, 2022.
Here is what Steel City Capital has to say about Evolution Petroleum Corporation (NYSE:EPM) in its Q1 2022 investor letter:
“Evolution Petroleum Corporation (NYSE: EPM): EPM is a small oil & gas company that owns a portfolio of diversified oil, natural gas, and NGL producing properties. EPM is atypical in the sense that it specifically focuses on non-operating working & revenue interests of producing assets that are in the twilight years of their lives. These assets require fairly minimal capital and have steady, predictable production profiles. Historically, EPM was a less attractive single-asset business, owning only a 23.9%/26.2% working/revenue interest in Denbury’s Delhi field, which is predominantly an oil asset. In recent years, however, management has meaningfully diversified, adding a total of four additional production assets to its portfolio. Pro-forma for its most recent acquisitions, EPM’s production mix is 43% oil, 40% natural gas, and 17% NGL. One of the more important factors that attracted me to EPM was management’s philosophy to operate an unhedged book1 . I subscribe to the school of thought that 1) years of underinvestment in upstream projects has resulted in a structural supply deficit that should be supportive of pricing for some time and 2) commodity exposure is an important hedge against rising inflation. Shares trade at an EV/EBITDA multiple in the mid-2x range and offer a mid-single-digit dividend yield.”
Photo by Viktor Kharlashkin on Unsplash
Our calculations show that Evolution Petroleum Corporation (NYSE:EPM) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Evolution Petroleum Corporation (NYSE:EPM) was in 10 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 10 funds in the previous quarter. Evolution Petroleum Corporation (NYSE:EPM) delivered a 15.63% return in the past 3 months.
In January 2022, we published an article that includes Evolution Petroleum Corporation (NYSE:EPM) in 5 Energy Dividend Stocks to Buy According to Billionaire Jim Simons’ Portfolio. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
