In this article, we discuss the 10 energy stocks billionaires are betting on. To skip the detailed analysis of the energy industry and its outlook, go directly to Billionaires Are Betting On These 5 Energy Stocks.
The energy sector has been going through significant volatility over the past few years. While governments around the globe are enacting policies and regulations to promote the transition toward renewable energy, fossil fuels still play a crucial role in the global economy, and it is a formidable challenge to replace them quickly.
One of the biggest issues the markets faced last year was the economic disasters caused by disruptions in energy supply chains due to geopolitical tensions. The global economy suffered heavily due to the rising prices of oil and gas after the Russian invasion of Ukraine. The US was hit by a 40-year high inflation and subsequent drastic rate hikes by the Federal Reserve to tackle it.
Moving on to 2023, oil and gas prices remained relatively low throughout the year. However, recent events such as the Hamas-Israel conflict coupled with production cuts from OPEC and Russia led to an increase in oil prices in the third quarter. The Middle East conflict created fears that the per-barrel oil prices might even touch as high as $150, and with interest rates already high, it could lead to an even more devastating impact on the global economy. Even though the conflict is still ongoing, the oil and gas prices have not gone much higher.
While the world is moving to transition completely to renewable energy, some challenges remain to consider. One of the biggest problems is the high cost of renewable energy infrastructure. The high-interest rate environment is one of the factors that is slowing down renewable investments. Furthermore, technological challenges coupled with the deep integration of fossil fuels in several economies around the globe are some hurdles that need to be taken care of.
The Energy Sector Performance and Outlook
Renewable energy investments hit a record high in 2023. In the first half of the current year, renewable energy investments went up 22% to $358 billion. Despite that, the energy sector as a whole did not perform well throughout the year. The third quarter gave the fossil fuels industry a little breather, but the segment still seems to be struggling.
Two-thirds of all renewable investments in the H1 were directed toward solar energy, yet it was the worst-performing industry, according to our November 1 report. Global X Solar ETF (NASDAQ:RAYS) performed somewhat better in the first quarter as it was up around 2%, but it kept going down the rest of the year. In the second quarter, the ETF was down by over 11% and declined by over 27% in the third quarter. Global X Solar ETF (NASDAQ:RAYS) is down nearly 44% year-to-date (at the time of writing on December 7).
Compared to that, Energy Select Sector SPDR Fund (NYSE:XLE)’s YTD declines are a mere 3.36%. The fund declined nearly 1.9% in the first quarter and 2% in the second. However, in the third quarter, conventional energy proved to be the best-performing industry on the back of production cuts and the Middle-East conflict, gaining nearly 11.4%. Oil and gas stocks such as Marathon Petroleum Corporation (NYSE:MPC) and Phillips 66 (NYSE:PSX) were up 30% and 26%, respectively. On the other hand, some of the biggest renewable energy stocks, such as First Solar, Inc. (NASDAQ:FSLR) and NextEra Energy, Inc. (NYSE:NEE), declined by nearly 15% and 23% in Q3, respectively.
First Solar, Inc. (NASDAQ:FSLR) and NextEra Energy, Inc. (NYSE:NEE) are down 1.79% and 28.3% YTD at the time of writing, respectively.
After oil prices experienced volatility in the third quarter, the Brent crude oil spot price declined by $3 from September’s $94 average. The US Energy Information Administration (EIA) expects the fourth quarter 2023 average per barrel price to be around $90 and remain around $94 per barrel in the first half of 2024 due to a modest decline in global inventories.
The EIA predicts that natural gas prices will average around $3.25 per Metric Million British Thermal Units (MMBtu) in 2024, which is slightly better than the current year’s $2.67. In addition, the agency believes that the prices will average around $3.40 this winter and will reach their peak in January 2024 at $3.60 per MMBtu.
According to a Deloitte report, the utility-scale solar capacity increased more than any other generation source between January and August 2023, and the additions were up 9% year-over-year (YoY). In 2022, renewables accounted for two-thirds of utility-scale power generation additions but accounted for half of the total new capacity additions in 2023, as wind additions were down 57% YoY. In 2024, the total renewable deployment is expected to increase by 17% YoY to 42 gigawatts.
Despite the current year not showing much favor toward renewable energy, some of the big names in the energy industry, like Exxon Mobil Corporation (NYSE:XOM), BP p.l.c. (NYSE:BP) and Chevron Corporation (NYSE:CVX) are making investments to capture a market share in the growing industry. On top of that, even the tech giant Amazon.com, Inc. (NASDAQ:AMZN) is making moves in the industry and announced adding 39 new renewable energy projects in Europe in 2023 alone.
While the energy industry has shown a lot of volatility in recent years, the sector has also proven to be a money-maker for its investors. In 2022, the oil Supermajors racked up over $200 billion in profits while the rest of the market was in shambles. Keeping these things in perspective, some of the energy stocks that billionaires are betting on include Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and ConocoPhillips (NYSE:COP).
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Our Methodology
For this article, we compiled a comprehensive list of energy stocks. Next, we determined the number of billionaires that had bought their shares during Q3 2023 through Insider Monkey’s database. We listed these stocks in an ascending order of the number of their billionaire investors.
Billionaires Are Betting On These 10 Energy Stocks
Dollar Value of Billionaire Holdings: $646.398 million
Sempra (NYSE:SRE) is one of the top energy infrastructure companies in the U.S. and is engaged in utility operations, developing energy infrastructure, and providing related services to its 40 million customers worldwide.
According to Insider Monkey’s proprietary data, 14 billionaires were betting on Sempra (NYSE:SRE)’s stock in the third quarter at a combined dollar value of $646.398 million.
On November 14, Sempra (NYSE:SRE) announced a quarterly dividend of $0.595, payable by January 15 to the shareholders of record on December 6. At the time of writing on December 7, the dividend yield of the company was 3.26%.
Sempra (NYSE:SRE) is one of the energy stocks that billionaires are betting on, along with Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and ConocoPhillips (NYSE:COP).
Sempra (NYSE:SRE) was mentioned in ClearBridge Investments’ third quarter 2023 investor letter. Here is what it said:
“Our two utilities Sempra (NYSE:SRE) and Edison International were also negatively impacted by rising rates, although both outperformed the utility benchmark. We maintain a large active overweight to Sempra and added opportunistically to Edison to reflect its strong fundamentals.”
Dollar Value of Billionaire Holdings: $15.862 billion
Occidental Petroleum Corporation (NYSE:OXY) is a Texas-based oil and gas exploration and production company that has assets in the United States, the Middle East, Africa, and Latin America.
On November 29, WSJ reported that Occidental Petroleum Corporation (NYSE:OXY) is in talks to acquire CrownRock LP for around $10 billion, including debt. CrownRock owns and operates 86K net acres in the northern part of the Midland Basin in Texas, a part of the Permian Basin.
According to Insider Monkey’s database that tracks 910 elite hedge funds, 75 funds held a stake in Occidental Petroleum Corporation (NYSE:OXY)’s stock in Q3, up from 73 in the previous quarter. Warren Buffett’s Berkshire Hathaway owned 224.129 million company shares worth over $14.541 billion, making it the most prominent investor in the company.
On November 7, Occidental Petroleum Corporation (NYSE:OXY) announced that it has entered into a partnership with BlackRock, Inc. (NYSE:BLK) for a joint venture through its subsidiary, 1PointFive. With BlackRock, Inc. (NYSE:BLK)’s $550 million investment, the joint venture will work on the development of STRATOS, the world’s largest Direct Air Capture (DAC) facility, which is expected to capture up to 500K metric tons/year of carbon dioxide.
Dollar Value of Billionaire Holdings: $434.831 million
Schlumberger Limited (NYSE:SLB) is one of the leading oilfield services companies in the world and provides products and services related to reservoir characterization, production, drilling, and processing. The corporation has a global footprint in over 100 countries.
Over the past three months, Schlumberger Limited (NYSE:SLB)’s stock was covered by 14 Wall Street analysts, and 13 of them kept a Buy rating on the shares. The average price target of $70.92 had an upside of 44.73% at the time of writing on December 7.
In the third quarter, Schlumberger Limited (NYSE:SLB)’s stock was held by 15 billionaires at a combined value of $434.831 million.
Fred Alger Management commented on Schlumberger Limited (NYSE:SLB) in its third quarter 2023 investor letter. Here is what it said:
“Schlumberger Limited (NYSE:SLB) provides technology for reservoir characterization, drilling, production, and processing to the oil and gas industry. During the period, shares contributed to performance driven in large part by higher oil prices and strong fiscal second quarter earnings results. Within its quarterly report. the company highlighted growing momentum in international offshore markets that reflected market share gains as well as solid end market activity, leading to strong profit margins and healthy free cash flow generation, in our view.”
Dollar Value of Billionaire Holdings: $1.267 billion
NextEra Energy, Inc. (NYSE:NEE) is a Florida-based company that has investments in energy infrastructures and generates, transmits, and distributes electricity.
On December 6, Guggenheim analyst Shahriar Pourreza raised the price target on NextEra Energy, Inc. (NYSE:NEE)’s stock to $70 from $65 and maintained a Buy rating on the shares.
In the third quarter, while the number of hedge funds with investments in NextEra Energy, Inc. (NYSE:NEE)’s stock went down to 58 from 59 in Q2, the combined stake value increased to $1.44 billion in Q3 from $918.327 million in Q2. Billionaire Ken Fisher’s Fisher Asset Management was the biggest shareholder of the company, with nearly 9.8 million shares worth $560.153 million.
Carillon Tower Advisers mentioned NextEra Energy, Inc. (NYSE:NEE) in its third quarter 2023 investor letter. Here is what it said:
“NextEra Energy, Inc. (NYSE:NEE) traded lower with all utilities during the third quarter as 10-year Treasury yields rose. Investors also began questioning the company’s ability to continue generating strong returns for its renewables development business.”
Dollar Value of Billionaire Holdings: $1.63 billion
PG&E Corporation (NYSE:PCG) is a California-based energy holding company. It uses nuclear, hydro, fuel cell, solar, and fossil fuel sources to produce electricity and distributes it as well.
On November 28, PG&E Corporation (NYSE:PCG) announced its cash dividend of $0.01 per share for the first time in six years. The dividend is payable by January 15 to the shareholders of record on December 29. The dividend yield is 0.23% at the time of writing on December 7.
11 Wall Street analysts covered PG&E Corporation (NYSE:PCG) over the last three months, and 8 kept a Buy rating on the company shares. The average price target of $18.73 represents an upside of 8.64% at the time of writing on December 7.
Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and ConocoPhillips (NYSE:COP) are some of the energy stocks that billionaires are betting on besides PG&E Corporation (NYSE:PCG).
