Chevron is an outlier as an investment for Stanley Druckenmiller, who has more of his portfolio in technology stocks.
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Stanley Druckenmiller bought Chevron stock now worth over $100 million in the fourth quarter, his largest new purchase during the quarter, new securities filings show.
The famed hedge fund manager, who now operates a family office, sold his Meta Platforms (ticker: FB) stock during the quarter, a move that proved to be prescient.
Hedge fund managers holding at least $100 million have to disclose their holdings 45 days after the end of each quarter in filings with the Securities and Exchange Commission known as 13F reports. The reports offer a rare look at the thinking of many high-profile investors, though it’s also a limited view. The filings are somewhat outdated given the lag before the filing date.
Druckenmiller added 824,440 shares of Chevron (CVX) to the portfolio in the quarter. At current prices around $133, his stake is worth $109 million today. The 13F filing doesn’t say when exactly when he bought in, but the stock mostly traded in a range between $100 and $117 during the quarter, so he has almost definitely made money on the bet.
His firm, Duquesne Family Office, did not immediately respond to questions about the investment.
Druckenmiller’s pivot to Chevron came at a time when energy stocks began to gain favor among generalist investors following a strong rebound from the depths of the pandemic. Energy stocks tend to do well during periods of inflation, particularly if companies can ride gains in the prices of commodities.
He has invested in some other energy-related companies including solar developer Sunrun (RUN). And he has money in other materials firms including mining giant Freeport-McMoRan (FCX). Still, Chevron is an outlier for Druckenmiller, who has more of his portfolio in technology stocks.
Analysts are divided on Chevron’s prospects this year given how well it has performed, as well as some weaker spots in its latest earnings. Some prefer smaller stocks that are likely to rise more if oil spikes.
But for an investor looking to make a relatively low-risk bet on energy stocks, Chevron seems to fit the bill. Its balance sheet is among the safest in the industry, and the company has been sending money back to shareholders.
Its dividend yield is now 4.2% and the company spent $1.4 billion on share buybacks in 2021, a number it’s likely to double or triple this year. Chevron made smart moves during the pandemic, including buying rival Noble Energy at a time when asset prices were low. Its forward price to earnings ratio of 13 times is well below that of the broader market.
Beyond the next couple of years, Chevron faces a similar challenge to other energy companies—becoming more efficient at pumping out oil while also transitioning away from it. Most of its new-energy projects are nascent, but advances in areas like biofuels and carbon capture could allow Chevron to become a player in the next phase of energy.
Write to Avi Salzman at [email protected]
