Kinder Morgan, Pioneer, Baker Hughes: Which Energy Stocks Are Garnering the Most Interest Among Billionaires?

After a nightmare two years during which oil prices fell from $100 to as low as $26 per barrel, there is finally some optimism among people in the energy sector. Oil companies have been busy cutting costs and improving margins, while also looking to boost production as oil prices began to slowly recover, and now appear poised for stronger results in the quarters to come. Hedge fund managers have also been hunting for bargains, with most oil stocks having fallen significantly since the beginning of the slump in the energy markets.

In this article, we’ll take it even further by looking at the energy companies that billionaire hedge fund managers have piled into during the second quarter. They are Baker Hughes, Southwestern Energy, Marathon Petroleum, Kinder Morgan, and Pioneer. Let’s see how billionaire fund managers have been trading these stocks and how they’ve been performing of late.

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Southwestern Energy Company (NYSE:SWN)

– Number of Billionaires With Long Positions (as of June 30): 10
– Number of Billionaires With Long Positions (as of March 31): 7

The number of billionaire hedge fund managers that had Southwestern Energy Company (NYSE:SWN) in their portfolios registered a significant boost during the second quarter. Andreas Halvorsen‘s Viking Global continues to hold the largest position among billionaires, as the fund held 37.6 million shares worth $474 million. Howard Marks’ Oaktree Capital Management was one of the funds that initiated a fresh stake in Southwestern Energy Company (NYSE:SWN) during the second quarter, having amassed 1.34 million shares by the end of June. Having lost roughly 90% of its value between April 2014 and December 2015, the stock seems to have hit its bottom during the first quarter of 2016 and has started edging higher since. The company managed to raise $1.25 billion from a share offering in June as it looks to increase the number of active wells to 130 from 30. For the second quarter, Southwestern Energy posted a loss of $620 million or $0.09 per share when adjusted for one-time costs, beating analysts’ expectations of a $0.10 loss per share. Revenue came in at $522 million, below the consensus of $524.5 million.

Marathon Petroleum Corp (NYSE:MPC)

– Number of Billionaires With Long Positions (as of June 30): 10
– Number of Billionaires With Long Positions (as of March 31): 6

Barry Rosenstein‘s JANA Partners added Marathon Petroleum Corp (NYSE:MPC) to its equity portfolio during the second quarter, gathering 2.72 million shares in the process. The position was valued at a little over $103 million according to the fund’s recent 13F filing. Israel Englander’s Millennium Management nearly tripled its stake in the company to 5.72 million shares worth $217 million. Marathon Petroleum Corp (NYSE:MPC) was spun off from Marathon Oil Corporation(NYSE:MRO) in 2011 and is a relatively young company. Since then, Marathon Petroleum has made good use of its cash flow, investing vigorously into exploration and production, and was good to shareholders as well. In the past five years, the company bought back approximately 25% of its stock and more than tripled its dividend. Marathon Petroleum currently pays an annual dividend of $1.44 per share, providing investors with a 3.41% annual yield. The recent slump in oil prices has triggered a 50% drop in the value of the stock, but it looks to have bottomed out already and seems to be headed up.

We have the details on billionaires’ three favorite energy stocks on the next page.

Baker Hughes Incorporated (NYSE:BHI)

– Number of Billionaires With Long Positions (as of June 30): 10
– Number of Billionaires With Long Positions (as of March 31): 9

Ken Griffin made a big move on Baker Hughes Incorporated (NYSE:BHI) during the second quarter, almost doubling his fund’s investment in the company. According to its latest 13F filing, Citadel Investment Group held 3.55 million Baker Hughes shares valued at $160 million. Israel Englander‘s Millennium Management, on the other hand, chose to trim its exposure to the stock, reducing its holding by 9% to 1.29 million shares worth $58.4 million at the end of June. Baker Hughes Incorporated (NYSE:BHI) was on the verge of being acquired by Halliburton Company (NYSE:HAL), but the deal was blocked by U.S. regulators, who argued it would hurt competition in the sector. Baker Hughes was awarded $3.5 billion in compensation for the failed merger and used a part of the funds to extinguish $1.1 billion worth of debt and buy back $500 million worth of shares. This had a significant impact on the company’s balance sheet and capital structure, as the debt-to-capital ratio fell to 17.4%, significantly lower than its main competitors.

Kinder Morgan Inc (NYSE:KMI)

– Number of Billionaires With Long Positions (as of June 30): 11
– Number of Billionaires With Long Positions (as of March 31): 9

Warren Buffett was one of the first to invest in Kinder Morgan Inc (NYSE:KMI) ahead of an expected energy comeback. At the end of the fourth quarter, Berkshire Hathaway reported a new stake amassing 26.5 million shares of the company and has not made any adjustments to it since then. Jim Simons’ Renaissance Technologies joined the party during the most recent quarter, having acquired 4.67 million shares worth $87.4 million. Kinder Morgan Inc (NYSE:KMI) has a market cap of $50 billion and currently pays an annual dividend of $0.50 per share, providing investors with an annual yield of 2.30%. After a massive 72% drop, the stock bottomed out in the beginning of January and has been climbing vigorously since then, being up by 50% for the year. Analysts at Morgan Stanley recently upgraded the stock to “Overweight” from “Equal Weight” and slightly increased their price target on it to $24 per share from the previous target of $23. The firm said that it sees better cash flow and improved credit metrics in 2018, and expects the stock to extend its current rally.

Pioneer Natural Resources (NYSE:PXD)

– Number of Billionaires With Long Positions (as of June 30): 11
– Number of Billionaires With Long Positions (as of March 31): 7

The most popular energy stock among billionaire hedge fund managers at the end of June was Pioneer Natural Resources (NYSE:PXD). Ken Griffin‘s Citadel Investment Group boosted its stake in the company by 42% to 1.74 million shares worth approximately $264 million. Andreas Halvorsen, on the other hand, chose to cut his fund’s exposure, dumping 47% of its holding in the process. According to its recently-released 13F filing, Viking Global held 1.37 million Pioneer shares worth roughly $207 million. Pioneer Natural Resources (NYSE:PXD) recently acquired 28,000 acres in the Permian Basin for $443 million, taking its holding to roughly 800,000 acres. The company said that it expects 2016 production to increase by 13%, while 2017 production growth is expected to reach 17%. For the second quarter, Pioneer Natural Resources posted an adjusted loss of $0.22 per share, having registered $1 billion in revenue, up by 21% year-over-year. Production rose by 5% to 233,000 barrels of oil equivalent per day, beating its own output guidance.

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