SPO Advisory Corp, formerly known as Main Street Partners, is a hedge fund firm co-founded by John Scully in 1991. The investment management firm employs a value-based investing approach, as the team of experts at SPO Advisory generally seek stocks that cost much less than valuation metrics say they are. Even more to that, SPO Advisory manages a very concentrated portfolio, with its top ten holdings representing 99.01% of its entire public portfolio. The firm’s most recent 13F filing reveals that its public equity portfolio has a value of $7.27 billion as of March 31, while its holdings are spread across the following sectors: consumer discretionary, technology, energy, and finance. In the following article we’ll discuss John Scully’s top energy stocks that include the following companies: Pioneer Natural Resources Co. (NYSE:PXD), Oasis Petroleum Inc. (NYSE:OAS) and Range Resources Corporation (NYSE:RRC).
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole; yet investors have been stuck (until now) investing in all of a hedge fund’s stocks: the good, the bad, and the ugly. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? These top small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Even better, since the beginning of forward testing at the end of August 2012, the strategy worked just as our research predicted and then some, outperforming the market every year and returning 142% over the last 33 months, which is more than 84 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
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SPO Advisory Corp increased its equity holding in Pioneer Natural Resources Co. (NYSE:PXD) by 502,000 shares, ending the first quarter with 7.35 million shares valued at $1.20 billion. This represents the third-largest holding of SPO Advisory and its top energy stock when considering the value of the shares held. The shares of Pioneer Natural Resources have dropped by slightly more than 4% year-to-date and are currently trading around $142 per share. The Texas-based independent upstream energy company has reported total production of 17.4 million barrels of oil equivalent, which yields a decrease of 5.6% quarter-over-quarter. Despite the above-mentioned decrease in production, the company’s crude oil and natural gas production has increased over the past 13 quarters. It is also expected that Pioneer Natural Resources will increase its production by approximately 4% in the fiscal second quarter of this year as a result of low commodity prices. Within our database, Andreas Halvorsen’s Viking Global represents the second-largest investor in Pioneer Natural Resources Co. (NYSE:PXD), with 5.81 million shares, trailing only SPO.
