Commodities are the new technology stocks. Microsoft (MSFT), Intel (INTC), Cisco (CSCO), and Hewlett-Packard (HPQ) turned into value stocks and the value stocks of the last decade became today’s growth stocks. Several prominent hedge fund managers like Jim Rogers, Julian Robertson, and Ray Dalio expressed their concerns about the US dollar. Hedge funds are flocking into gold, oil, metals and other hard assets that can retain value in an inflationary environment. The demand from high growing emerging market countries also put a floor under these commodities.
Insider Monkey summarized hedge fund holdings in top commodity producers. We follow 175 hedge funds. The industry classifications are obtained from Fidelity. Here are the top commodity producers that at least 5 hedge funds have at least $300 Million invested at the end of 2010:
Company Name | Symbol | Total Investment (x1000) | Number of Funds |
ANADARKO PETROLEUM CORP | APC | 3,309,985 | 27 |
CONOCOPHILLIPS | COP | 2,601,609 | 20 |
CHESAPEAKE ENERGY CORP | CHK | 2,260,364 | 13 |
ANGLOGOLD LTD | AU | 2,028,209 | 6 |
OCCIDENTAL PETROLEUM CORP | OXY | 1,693,923 | 18 |
BP PLC | BP | 1,549,142 | 24 |
EXXON MOBIL CORP | XOM | 1,532,110 | 28 |
WILLIAMS COS INC. (THE) | WMB | 1,473,479 | 27 |
FREEPORT-MCMORAN | FCX | 1,198,024 | 23 |
WALTER ENERGY INC | WLT | 990,258 | 19 |
TECK RESOURCES LTD | TCK | 883,951 | 9 |
BHP BILLITON LTD | BHP | 753,230 | 11 |
PLAINS EXPLORATION & PROD | PXP | 725,336 | 13 |
PIONEER NATURAL RESOURCES | PXD | 638,402 | 14 |
NOVAGOLD RESOURCES INC | NG | 633,822 | 9 |
CHEVRON CORP | CVX | 613,519 | 16 |
VALE SA | VALE | 598,069 | 14 |
DEVON ENERGY CORP | DVN | 572,990 | 21 |
MASSEY ENERGY CO | MEE | 551,767 | 22 |
EL PASO CORP | EP | 540,850 | 12 |
RIO TINTO PLC | RIO | 523,616 | 7 |
ALPHA NATURAL RESOURCES | ANR | 497,651 | 15 |
KINROSS GOLD CORP | KGC | 494,047 | 10 |
GOLD FIELDS LTD | GFI | 486,190 | 5 |
APACHE CORP | APA | 478,179 | 12 |
CENOVUS ENERGY INC | CVE | 477,208 | 8 |
CNOOC LTD | CEO | 454,381 | 6 |
CONSOL ENERGY INC. | CNX | 448,786 | 17 |
PAN AMERICAN SILVER CORP | PAAS | 443,951 | 9 |
ENCANA CORP | ECA | 434,752 | 11 |
RELIANCE STEEL & ALUMINUM CO | RS | 427,386 | 7 |
INTEROIL CORP | IOC | 423,298 | 6 |
SOUTHWESTERN ENERGY CO | SWN | 422,476 | 13 |
WHITING PETROLEUM CORP | WLL | 414,111 | 16 |
NEWFIELD EXPLORATION CO | NFX | 391,878 | 14 |
RANGE RESOURCES CORP. | RRC | 374,266 | 10 |
CIMAREX ENERGY CO. | XEC | 354,816 | 15 |
ENERGY XXI (BERMUDA) LTD | EXXI | 354,470 | 12 |
NEWMONT MINING CORP | NEM | 346,226 | 20 |
EOG RESOURCES INC. | EOG | 318,579 | 14 |
IVANHOE MINES LTD | IVN | 313,133 | 11 |
AGNICO EAGLE MINES LTD | AEM | 304,567 | 8 |
BARRICK GOLD CORP | ABX | 302,704 | 19 |
Anadarko Petroleum (APC) tops our list with 27 funds owning $3.3 Billion in APC. John Paulson, who made $5 Billion in 2010 from his hedge fund, had the largest position in the company, $1.6 Billion. Ken Fisher also had more than $700 Million invested in the company at the end of December.
ConocoPhillips (COP) is owned by 20 hedge funds and ranks second. Warren Buffett had nearly $2 Billion invested in this stock at the end of December, followed by Bill Miller’s $230 Million. The stock returned %15 so far this year.
Chesapeake Energy (CHK) ranks third. Thirteen funds own $2.26 Billion in CHK stock. Legendary activist investor Carl Icahn revealed a 5.8% stake in CHK on December 20th and CHK immediately jumped 3%. However, that wasn’t the end of it. Even if you had waited till the last day of trading in 2010 and bought CHK at the close, your return could have been more than 26% in three and a half months.
El Paso (EP) is the best performer in this list, returning more than 30% since the beginning of this year. Daimondback Capital, Shumway Capital, and Jana Partners were the largest holders of this stock. Dan Loeb’s Third Point also initiated a large position in El Paso during the first quarter of 2011. Dan Loeb also has WMB in his portfolio. WMB returned 25% this year. Steve Cohen is very bullish about this stock, which was one of his top three stock picks for 2011.
We like commodity producers and expect them to perform spectacularly in an inflationary environment. Investors can form a diversified portfolio of these stocks and achieve superior returns if inflation becomes a reality. The equal weighted average return of these stocks was 5.8% since the beginning of this year. The value-weighted average return of these stocks was 6.6% during the same time period. This shows hedge fund managers’ talent in picking winners within this industry.
Disclosure: I am long CHK.
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