As the energy sector is declining amid low oil and gas prices, some investors seem to be taking advantage of an opportunity to purchase oil stocks at lower prices, betting on the commodity to rebound. One of these investors is John H. Scully of SPO Advisory Corp, who in the last several months has been loading up on shares of Oasis Petroleum Inc. (NYSE:OAS). In a new filing with the Securities and Exchange Commission, SPO Advisory reported the acquisition of 7.9 million shares of Oasis Petroleum at $12.8 per unit, raising its stake to 20.37 million shares. In this way, the investor currently holds an activist stake in the company that amasses 15.8% of Oasis Petroleum’s outstanding stock. Additionally, the last 13F filing of SPO Advisory showed that the investor has been particularly bullish on two other energy stocks: Pioneer Natural Resources (NYSE:PXD) and Range Resources Corp. (NYSE:RRC).
SPO Advisory Corp is a fund that owns a concentrated equity portfolio that contained positions in 13 companies at the end of 2014, with an aggregate value of $7.50 billion. However, the top five stakes in the equity portfolio amass over 75% of the total portfolio value and at the end of 2014 these positions were represented by Equinix Inc (NASDAQ:EQIX), Charter Communications, Inc. (NASDAQ:CHTR), Liberty Global plc (NASDAQ:LBTYK), Pioneer Natural Resources (NYSE:PXD), and Charles Schwab Corp (NYSE:SCHW). Therefore, even from these five companies we can see that Mr. Scully has a lot of exposure towards Financial, Services, Technology and Energy stocks.
Oasis Petroleum Inc. (NYSE:OAS) was on the 11th spot in SPO Advisory Corp’s equity portfolio in terms of value. The fund initiated a stake in the company during the fourth quarter and held around 7.73 million shares at the end of 2014 and in January it reported raising its stake to 12.47 million shares. The latest purchase of 7.9 million shares has been made through a public offering of common stock in which Oasis Petroleum plans to sell 32 million shares. Meanwhile, since the end of September, the stock of Oasis Petroleum fell by 68%. In the last 52 weeks, Oasis Petroleum Inc. (NYSE:OAS) lost around 69%, significantly underperforming the oil & gas exploration and production industry, which declined by 15%.
As has been mentioned earlier, despite Oasis Petroleum Inc. (NYSE:OAS)’s stock losing ground in the last months, investors are buying shares, hoping that oil prices will go up, which will improve the company’s profitability. In this way, among 737 funds that we track, at the end of 2014, 31 investors held shares of Oasis Petroleum, up from 29 funds a quarter earlier. However, the aggregate value of the positions held by funds from our database declined to $520.78 million, from $581.05 million, which might have been partially offset by the drop in the price of the stock. Among investors that initiated stakes in Oasis Petroleum Inc. (NYSE:OAS) during the fourth quarter are Dmitry Balyasny’s Balyasny Asset Management and Jim Simons’ Renaissance Technologies, which disclosed ownership of 4.82 million shares and 599,800 shares respectively. On the other hand, other funds such as Steve Cohen’s Point72 Asset Management and Cliff Asnes’ AQR Capital Management sold out their positions during the last three months of 2014.
Oil prices are still looking for the bottom, with crude oil (WTI) currently trading slightly above $50 and the latest reports suggesting that with ample supplies and shrinking storage possibilities for oil, the commodity might still go down even further. Nevertheless, Mr. Scully seems to be optimistic as he has been bullish on several companies in the energy sector during the fourth quarter. As mentioned earlier, Pioneer Natural Resources (NYSE:PXD) is the fourth-largest holding in SPO’s 13F portfolio and during the October-December period the investor raised its stake by 25% to 6.85 million shares, valued at $1.02 billion. Pioneer, which is another E&P company, lost 19% in the last year, which is also below the average industry decline of 15%.
As it is one of the largest companies from the E&P space, Pioneer Natural Resources (NYSE:PXD) has always been on investors’ radars. The last round of 13F filings showed that 59 funds (among those that we track) held long positions with an aggregate value of $3.60 billion worth of the company’s stock, including eight billionaire investors owning roughly half of this aggregate value. SPO Advisory is the largest shareholder of Pioneer Natural Resources among funds that we track, followed by Andreas Halvorsen’s Viking Global with 6.59 million shares. Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group held 1.92 million shares and 1.24 million shares respectively. In addition, Millennium and Citadel boosted their positions in Pioneer Natural Resources (NYSE:PXD) by 1,200% and 2,300% respectively during the fourth quarter, although the holdings still amass less than 1% of their equity portfolios.
Another oil and gas stock on which Mr. Scully has been bullish is Range Resources Corp. (NYSE:RRC), which also comes from the Exploration and Production space. In this $8.3 billion company, SPO Advisory reported a new position with 4.80 million shares, valued at $256.35 million in its last 13F filing. Despite lower oil and gas prices, Range Resources Corp. (NYSE:RRC) seems to be poised for growth as the company reported revenues of $2.71 billion for 2014, up from $1.86 billion in the previous year and its EBITDA surged to $1.78 billion from $826 million in 2013. Among other investors bullish on Range Resources Corp. (NYSE:RRC) are Wallace Weitz’s Wallace R. Weitz & Co. and Magnetar Capital, led by Alec Litowitz and Ross Laser, which raised their stakes by 85% and 24% on the quarter respectively to 2.05 million shares and 1.91 million shares.
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