Top hedge fund managers went bargain hunting in the oil patch in the second quarter, buying shares whose prices had fallen because of BP's Gulf of Mexico well disaster and lower oil prices.
Top managers including billionaire Carl Icahn, Eric Mindich and Dinakar Singh, whose stock picks are closely watched in investment circles, added energy stocks to their holdings as billions of gallons of oil gushed into the Gulf, according to quarterly securities reports filed on Monday.
Others buying energy shares included David Einhorn, former Fidelity Investments star Jeff Vinik and the $22 billion Boston-based fund Adage Capital.
Fund managers must say what U.S. listed equities they owned within 45 days after the quarter ends.
While energy stocks ranked among the worst performers during a quarter that also featured a still unexplained flash-crash and fresh fears that the U.S. economy would recover more slowly, hedge fund managers staked out the sector much like they had with financial firms earlier in the year.
After building his energy holdings slowly at the beginning of the year, Icahn picked up the pace in April, May and June by committing nearly $1 billion to the sector after the Deepwater Horizon drilling platform at BP's Macondo well exploded and sank in the Gulf of Mexico.
The purchases included 2 million shares of oil and gas producer Anadarko [APC 51.94 -0.43 (-0.82%) ] and 240,000 shares of offshore drilling specialist Ensco [ESV 43.80 0.09 (+0.21%) ] sponsored American Depository Receipts, according to documents submitted to the Securities and Exchange Commission Monday.
Icahn also added 2.4 million shares of NRG Energy [NRG 21.92 -0.04 (-0.18%) ], a big power utility. Dinakar Singh's hedge fund TPG-Axon bought 1.4 million shares of Anadarko, while adding 2.1 million shares of drilling services specialist Baker Hughes [BHI 39.93 0.14 (+0.35%) ]and 3.5 million shares of Halliburton [HAL 27.81 -0.29 (-1.03%) ], another major oil services player.
Mindich, whose skills at Goldman Sachs [GS 147.76 -0.32 (-0.22%) ] helped him raise a record $3 billion when he started his fund in 2004, bought 1.3 million shares of BP [BP 38.40 -0.53 (-1.36%) ] and call options to buy 1 million more.
Mindich's $13 billion Eton Park Capital also bought 168,000 shares of Baker Hughes, 165,000 shares of Diamond Offshore Drilling [DO 61.37 0.86 (+1.42%) ], 300,000 shares of Forest Oil [FST 27.81 0.06 (+0.22%) ], 256,000 shares of Marathon Oil [MRO 32.53 -0.23 (-0.7%) ], 420,000 shares of Plains Exploration & Production [PXP 23.50 -0.69 (-2.85%) ] and 237,000 shares of Suncor [SU 31.71 0.12 (+0.38%) ].
Vinik added 3.1 million shares of Exxon Mobil [XOM 59.88 -0.03 (-0.05%) ], 11,000 shares of Ensco and 2 million shares of the Oil Services Holdrs Trust [OIH 102.44 0.20 (+0.2%) ], which owns a basket of 15 stocks in the sector.
Einhorn's Greenlight Capital bought 7.4 million shares of Ensco, just over 5 percent of the company's shares. Ensco "was not involved in the horrible accident, which should not materially impact the company's long-term potential,'' Einhorn wrote in a letter to his investors last month.
Adage, run by former managers from Harvard University's endowment, owned 3.4 million shares of BP at the end of the quarter, up from 124,000 three months earlier. The firm added to existing positions in Anadarko, Ensco and Halliburton.
The bets mark a dramatic change in their portfolios, coming as many other investors pulled their money out. BP's stock price fell over weeks until its value had fallen by half.
Even prominent mutual fund manager Fidelity Investments, where millions of Americans hold their college savings and retirement accounts, appears to have joined the trend.
Fidelity managers added 24.2 million shares of Exxon, leaving it with 74.9 million shares, making it the fifth biggest holding for Fidelity.
It also added 10.9 million shares of BP.
The forms managers filed Monday include only U.S.-listed equity securities and related derivatives. Bonds, other securities and short positions are typically not disclosed. Managers may also omit U.S.-listed equities under certain circumstances or file some holdings on confidential filings.
Current DateTime: 03:25:12 16 Aug 2010
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* Icahn Boosts Energy Picks
* Oil Prices Slip Again
Copyright 2010 Reuters.
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