Why Are These 3 Energy Stocks Surging Today?

Energy stocks are having one of their best weeks in recent memory as the price of WTI crude has gained over 10% this week to crest $50 per barrel. While still well off of its $100+ levels of a little over a year ago, the rally has pushed WTI crude above $50 for the first time since July. Three energy stocks are among the day’s big gainers, and we’ll study the latest action on them and whether they appear to be good buys at their current price in this article.

Penn West Petroleum Ltd (USA) (NYSE:PWE)

• Investors with Long Positions (as of June 30): 15
• Aggregate Value of Investors’ Holdings (as of June 30): $93.89 Million
• Percentage of Shares Owned by Investors: 10.80%

Let’s start with Penn West Petroleum Ltd (USA) (NYSE:PWE), which has gained 8.80% today and a stunning 121.67% this week. In lockstep with oil prices, the rally has pulled Penn West’s shares up to their highest level since July, though they remain down by 36.06% year-to-date. Owing to the difficult energy environment, Penn West has divested itself of several of its assets this year, including its non-operated 9.5% working interest in its Weyburn unit in Saskatchewan, Canada, which has been producing roughly 2,500 barrels per day.

Investors in our database were slightly bearish on Penn West Petroleum Ltd (USA) (NYSE:PWE) in the second quarter, with ownership dipping by three funds and the value of funds’ collective holdings declining marginally, while shares rose slightly during the period. First Eagle Investment Management held the largest stake in the company of those investors, at 25.13 million shares, while Youlia Miteva’s Proxima Capital Management held 8.35 million shares valued at $14.45 million, representing over 2% of the value of its total public equity portfolio.

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Energy XXI Ltd (NASDAQ:EXXI)

• Investors with Long Positions (as of June 30): 18
• Aggregate Value of Investors’ Holdings (as of June 30): $35.52 Million
• Percentage of Shares Owned by Investors: 14.30%

Energy XXI Ltd (NASDAQ:EXXI) is up by 9.65% today and 112.81% this week. We posed the question of whether shares had finally hit rock bottom back in July. Given the unappealing fundamentals of the company and the bearish sentiment of late among the smart money we follow, we determined that it was not the best bounce-back candidate, and indeed, shares continued to decline into late September, though the rally this week has pushed them back above where they were in early-July.

That will please the investors who did remain steadfast in their conviction regarding Energy XXI Ltd (NASDAQ:EXXI)’s potential, including most notably Mark McGoldrick and Jason Maynard’s Mount Kellett Capital Management, which had over 8% exposure to the stock in its public equity portfolio as of June 30, owning 5.92 million shares.

Penn Virginia Corporation (NYSE:PVA)

• Investors with Long Positions (as of June 30): 21
• Aggregate Value of Investors’ Holdings (as of June 30): $109.23 Million
• Percentage of Shares Owned by Investors: 34.80%

Investors in our database were the most bullish on Penn Virginia Corporation (NYSE:PVA) when it comes to the hot energy stocks discussed in this article, owning greater than one-third of its outstanding shares, though ownership did fall from 26 on March 31. Penn Virginia has gained 10.38% today and 154.18% this week; not bad for a company we recently ranked as a penny stock poised to explode, with shares having gained over 37% since the publication of that article.

Among the many reasons to like the stock’s chances was the fact that George Soros’ family office retained its 6.00 million-share position throughout the second quarter, even as the stock struggled under the weight of declining oil prices. Several other prominent investors also made big purchases during that time, including Israel Englander, Kyle Bass, and Steve Cohen.

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