Billionaire Steven Cohen Bought $160 Million of This Natural Gas Stock

The world’s top hedge fund manager is betting big on Canada’s energy sector.

The Motley Fool

Inside Wall Street’s inner circle of top traders and power brokers, everybody knows Steven Cohen.

Since its inception in 1992, Cohen’s SAC Capital has generated a 30% compounded annual return. Today, it’s one of the largest hedge funds in the world with over $14 billion in assets under management.

Based on his remarkable track record, I always pay attention to what stocks Cohen is buying. And recently, he has been making some big bets on Canada’s energy industry.

If you don’t buy this stock now, you’ll regret it later

In recent years, Cohen has expressed his bullishness on natural gas. That explains why he has built large positions in producers like Chesapeake Energy and Anadarko Petroleum. These blue-chip names are a great way to play the rebound in commodity prices.

He has also just revealed a new position. According to SAC Capital’s most recent SEC filings, Cohen has accumulated a large stake in natural gas giant Encana (TSX: ECA)(NYSE: ECA). Based on the firm’s most recent 13-F disclosure, Cohen has purchased $160 million in common shares and call options.

As regular Motley Fool Canada readers are already aware, it has been turbulent times at Encana. After spinning off its oil assets in 2009, the company was left high and dry when the bottom fell out of natural gas prices. Encana’s sprawling asset base was also an unwieldy mess.

But since taking the helm at the company last year, Encana’s new Chief Executive Doug Suttles has prescribed a hearty dose of tough medicine. Over the past year, he has slashed the company’s dividend, laid off thousands of employees, and sold off dozens of unprofitable properties. His ultimate vision is to pare down Encana’s asset portfolio to six core properties and transition to a more lucrative oil and liquids-rich production mix.

These efforts are already showing up in the company’s financial results. Encana is once again profitable. During the first quarter, the company earned $431 million or $0.16 per share, compared to a loss of $431 million or $0.59 per share during the same period last year.

Yet in spite of the progress Encana has made, 2014 is only a transition year. By 2017, the company is hoping that higher-priced oil and natural gas liquids will account for two-thirds of its production mix, versus only 20% today. That means the stock still has a lot of untapped upside potential.

Is Encana about to hit $30?

One word of warning: Wall Street is starting to catch on to this opportunity. Since Suttles announced his turnaround plan in November, Encana shares have rallied over 25%. Other notable hedge fund managers — including Ken Griffin, Martin Whitman, and Israel Englander — initiated or increased the size of their positions last quarter.

What could they all possibly see in Encana? I’d say they see a big rally ahead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robert Baillieul has no position in any stocks mentioned.

More on Investing

Dividend Stocks

2 of the Best Dividend Stocks to Buy Before They Start to Recover

These dividend stocks offer superior deals for those seeking long-term passive income, but these prices certainly won't last forever.

Read more »

Dividend Stocks

Algonquin Insiders Are Loading Up on AQN Stock – Should You Follow?

Algonquin Power and Utilities (TSX:AQN) insiders poured millions into AQN stock last week. Share valuation multiples seem compelling.

Read more »

Young adult woman walking up the stairs with sun sport background
Stocks for Beginners

New Investor? Buy These 2 Growth Stocks

These two growth stocks are perfect if you want superior growth in the near future but a long-term hold that…

Read more »

Man data analyze

A Passive-Income Triple Play: 3 Top TSX Stocks to Buy Together

These two top Canadian dividend stocks provide long-term investors with much-needed stability and passive income right now.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

TFSA: 2 Stocks To Earn Passive Income Even in a Recession

Investors are coping with 2023 recession fears differently. Some are investing in stocks that can create long-term passive income.

Read more »


2 Top Canadian Retail Stocks That Could Get a Holiday Boost

Here's why Canadian Tire (TSX:CTC.A) and Canada Goose (TSX:GOOS) are two top Canadian retail stocks to buy right now.

Read more »

Cogs turning against each other
Dividend Stocks

3 Stocks You Can Confidently Own in an Upside-Down Market

Although many stocks have lost major value this year, here are three high-quality companies you can confidently own in this…

Read more »

Increasing yield
Dividend Stocks

2 Ultra-High-Yield Dividend Stocks on Sale Today

Besides their ultra-high yields, here are more factors that make these two of the best Canadian dividend stocks worth buying…

Read more »