Hedge Funds Amassing Energy?

by Todd Shriber 

At the SkyBridge Alternatives Conference in Las Vegas, energy stocks seemed to be on the mind of at least a couple of noted hedge fund managers. That’s no surprise given that this sector makes headlines on a daily basis and has been the top performer among the 10 industry groups tracked within the S&P 500 this year, according to data from Standard & Poor’s.

Steven Cohen, founder of SAC Capital Advisors, is among the hedge fund luminaries on board with the energy trade. “The commodity selloff provides an interesting entry point for energy stocks,” Cohen said at the conference, according to The Wall Street Journal.

Cohen has been a fan of energy names for at least a few months. In February, he extolled the virtues of Williams Cos. (WMB) and Plains Exploration (PXP), which is reportedly his portfolio’s largest holding, according to GuruFocus. SAC also holds a position in Murphy Oil (MUR), GuruFocus said.

Cohen adds that energy stocks are discounting oil prices at much lower levels than where black gold currently trades, Bloomberg reported.

The Journal also said that Leon Cooperman of Omega Advisors feels bullish on energy stocks, and that his firm is overweight the sector. Give Cooperman some credit for embracing risk as he chatted up one of the energy sector’s most controversial names: Transocean (RIG), the world’s largest provider of offshore drilling services.

As Trader Daily reported last week, Transocean’s financial liability for the Gulf of Mexico oil spill in April 2010 is still unknown, but could be quite hefty.

If nothing else, the fact that Cohen and Cooperman, perhaps among others, are embracing energy names is good news for beleaguered investors in the energy sector who have been under siege recently.

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