Top 5 Oil and Gas Stocks To Invest In According to Hedge Funds

In this article, we discuss the top 5 oil and gas stocks to invest in according to hedge funds. To read the analysis and recent events in the oil and gas industry, go directly to the Top 10 Oil and Gas Stocks To Invest In According to Hedge Funds.

5. Cheniere Energy, Inc. (NYSE:LNG)

Number of Hedge Fund Holders: 64

Cheniere Energy, Inc. (NYSE:LNG) started as an oil and gas company but later on, the company changed its focus toward liquified natural gas. It was the first US company to export liquified natural gas when Cheniere Energy, Inc. (NYSE:LNG)’s Sabine Pass terminal started to operate in 2016.

In 2022, Cheniere Energy, Inc. (NYSE:LNG) experienced some solid revenue and income growth with revenue more than doubling year-over-year to $33.43 billion. The company’s earnings per share for the year were $5.64, compared loss per share of $9.25 in the previous year.

Cheniere Energy, Inc. (NYSE:LNG) was held by 64 hedge funds in the fourth quarter of 2022. In the same quarter, D E Shaw increased its holdings in the company by 11% to 907,792 shares worth $136.13 million and was the largest stakeholder in the company.

TimesSquare Capital Management made the following comment about Cheniere Energy, Inc. (NYSE:LNG) in its Q4 2022 investor letter:

“Within Energy, Cheniere Energy, Inc. (NYSE:LNG) is an energy infrastructure company that operates liquefied natural gas (LNG) terminals in Louisiana and Texas. Despite reporting inline for the latest quarter, its stock traded down -9%. Contributing factors were Europe had filled its storage ahead of the winter and a recent dip in natural gas pricing. The market for LNG is likely to remain tight for the next several years. Notably, Cheniere paid down $1.3 billion of long-term debt and repurchased $75 million of common stock during the quarter. Cheniere is well positioned to benefit from ongoing tightness in global gas markets.”

4. ConocoPhillips (NYSE:COP)

Number of Hedge Fund Holders: 67

ConocoPhillips (NYSE:COP) is an American oil and gas exploration and production company headquartered in Texas. The company was ranked #77 on the Fortune 500 in 2022 after jumping 79 spots from its 2021 rankings.

On April 12, ConocoPhillips (NYSE:COP) revealed its mega plan for shareholder returns. In the next 10 years, the company plans to spend $115 billion of its free cash flow on shareholder distributions and capital spending. The company’s average annual shareholder returns are expected to be around 5% through dividends and repurchases.

In Q4 2022, 67 hedge funds had a stake worth nearly $3 billion in ConocoPhillips (NYSE:COP). In the previous quarter, the company was a part of 64 hedge fund portfolios at a combined value of $2.67 billion. ConocoPhillips (NYSE:COP)’s most prominent hedge fund holder in Q4 was Diamond Hill Capital with over 5.5 million shares worth $650.5 million.

Oakmark Fund made the following comment about ConocoPhillips (NYSE:COP) in its Q1 2023 investor letter:

“ConocoPhillips (NYSE:COP) is one of the largest and lowest cost U.S. exploration and production companies in the country, led by CEO Ryan Lance—in our view one of the best value creators in the industry. ConocoPhillips’s share prices fell in the first quarter as oil prices receded, which is not atypical. We were buying the company at prices where it could generate its entire market cap in free cash flow over the next decade while growing the production such that at the end of that time, the base of production would be one-third higher. This sort of reinvestment opportunity is unique to ConocoPhillips and clearly not reflected in the current share price.”

3. Schlumberger Limited (NYSE:SLB)

Number of Hedge Fund Holders: 67

Schlumberger Limited (NYSE:SLB) is the world’s largest offshore drilling company and is headquartered in Texas. The company provides services such as seismic data processing, formation evaluation, well testing, and directional drilling among others to petroleum companies worldwide.

Schlumberger Limited (NYSE:SLB)’s hedge fund sentiment increased quite significantly in the fourth quarter of 2022 compared to the previous quarter. The company was held by 67 hedge funds with a combined value of $4.66 billion in Q4, compared to 63 hedge funds with a combined value of $2.44 billion in the previous quarter.

On April 3, Susquehanna maintained a Positive rating on Schlumberger Limited (NYSE:SLB) and lowered the price target to $65 from $68. The firm revised its price target as it “modestly lowered” the H2 2022 estimates for several North American oil field services companies.

VGI Partners made the following comment about Schlumberger Limited (NYSE:SLB) in its 2022 annual investor letter:

“In addition to defence, we have focused our efforts on other new sectors where we see structural growth, including energy and medical technology. The long-term outlook for energy looks highly attractive given many years of under-investment and more recently amplified by ESG constraints and corporate discipline. Although we reviewed commodity owners (where we leveraged the expertise of the Regal resources team), we focused our efforts on the second derivative – the oil service companies. These are the picks-and-shovels of the industry and arguably the highest-quality way to gain exposure. As a result, we invested in Schlumberger Limited (NYSE:SLB) earlier this year and grew this to a circa 8% weight during the year (now circa 3%)”

2. Occidental Petroleum Corporation (NYSE:OXY)

Number of Hedge Fund Holders: 71

Occidental Petroleum Corporation (NYSE:OXY) is a Texan oil and gas company and is one of the best-undervalued energy stocks to buy according to analysts. The company operates in the USA, Canada, the Middle East, and Chile.

Occidental Petroleum Corporation (NYSE:OXY) was held by 71 hedge funds in the fourth quarter of 2022. Berkshire Hathaway was the most prominent shareholder of the company in the quarter with shares worth over $12.24 billion. On top of that, as we previously mentioned that Berkshire Hathaway gained approval from the Federal Energy Regulatory Commission in August 2022 to buy up to 50% of Occidental Petroleum Corporation (NYSE:OXY)’s stock, the firm has been aggressively buying the company’s shares.

On April 13, Truist analyst Neal Dingmann reaffirmed a Buy rating on Occidental Petroleum Corporation (NYSE:OXY)’s shares and raised his price target to $86 from $84. On the same day, Citi analyst Scott Gruber also raised his price target on the firm to $66 from $63 and maintained a Neutral rating on the company shares.

Here is what Smead Capital Management had to say about Occidental Petroleum Corporation in its Q3 2022 investor letter:

“Our top-performing stocks in the quarter includes Occidental Petroleum (NYSE:OXY). Oil and gas have been the best game in the stock market town this year and it was a pleasant surprise to see home builders pick up even with dour news on interest rates and the economy. For the first three quarters of the year, we should change the name of our fund to the Jed Clampett Fund. Occidental Petroleum (NYSE:OXY), was one of the standouts. Up through the bear market came a “bubblin’ crude!”

1. Exxon Mobil Corporation (NYSE:XOM)

Number of Hedge Fund Holders: 79

Exxon Mobil Corporation (NYSE:XOM) is an American oil and gas company and is the top oil and gas stock to invest in according to hedge funds as 79 hedge funds had a stake worth $7.1 billion in the company in the fourth quarter of 2022. It is also one of our top safe stocks to buy for beginners.

In the last three months, Exxon Mobil Corporation (NYSE:XOM) has been covered by 18 analysts with an average price target of slightly over $128. Out of the 18 analysts, 11 maintain a Buy or Overweight rating on the company stock.

Exxon Mobil Corporation (NYSE:XOM) is a dividend stock with a history of dividend increases over the last 4 decades. The company paid out its latest quarterly dividend of $0.91 on March 10 and the next one is expected to be paid out in June.

Here’s what First Eagle Investments said about Exxon Mobil Corporation (NYSE:XOM) in its Q2 2022 investor letter:

“Integrated oil and gas giant Exxon Mobil performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industrywide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”

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