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6 Best Oil and Gas Stocks to Buy According to Billionaire Carl Icahn

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·7 min read
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  • IEP
  • SWX
  • SD
  • DK
  • OXY
  • LNG

In this article, we discuss the 6 best oil and gas stocks to buy according to billionaire Carl Icahn. If you want to skip our detailed analysis of the oil and gas sector, go directly to the 3 Best Oil and Gas Stocks to Buy According to Billionaire Carl Icahn.

The energy sector was undoubtedly one of the hardest hit segments of the economy due to the COVID-19 pandemic, as production all around the world slowed, supply chains were disrupted, and travel was restricted. Demand for oil and gas in the industrial sector dipped sharply, and the petrol, crude oil, and fuel prices also dropped significantly due to abundant supply and limited demand.

However, the energy sector has rebounded strongly from the sharp lows in 2020 as the economy is projected to grow by 5.4% in 2021 and 4.2% in 2022. Even though oil prices in 2021 have skyrocketed to the highest level in the past six years, the market dynamic remains uncertain.

Going into 2022, oil and gas companies are aware that they cannot survive the uncertain and highly dynamic market by riding the oil price cycles anymore, so they are making corporate shifts in strategy, including portfolio and resource optimization, setting smart goals for clean and sustainable energy transition, focusing on climate change, and fulfilling ESG requirements.

Like several seasoned and amateur investors, Carl Icahn, a billionaire American hedge fund manager and activist investor, holds vested interests in the oil and gas sector. Icahn graduated from Princeton University with a Bachelor's in 1957, and began his financial career in 1961. With almost 60 years in the financial sector, Icahn gained the reputation of a corporate raider over the years, since his strategy was to buy out companies with large stakes, and switch up the existing board of directors.

Icahn has been very vocal against passive investing, and his own career reflects bold investment decisions. Over the years, Icahn has invested largely in prominent companies including Netflix, Inc. (NASDAQ:NFLX), Apple Inc. (NASDAQ:AAPL), and Lyft, Inc. (NASDAQ:LYFT).

In 2014, the billionaire also pushed for eBay Inc. (NASDAQ:EBAY)’s corporate spin off of PayPal Holdings, Inc. (NASDAQ:PYPL).

Billionaire Carl Icahn has a 13F portfolio worth $22.5 billion. Before 2011, he ran a famous hedge fund based on his activist stakeholder investment strategy, namely Icahn Capital LP, but he retired from the fund and returned the money to investors. According to the third quarter 13F filings, 19% of the billionaire’s investments are concentrated in the energy sector. The most notable energy stocks in Carl Icahn’s Q3 portfolio include Southwest Gas Holdings, Inc. (NYSE:SWX), Occidental Petroleum Corporation (NYSE:OXY), and Cheniere Energy, Inc. (NYSE:LNG), among others discussed in detail below.

Our Methodology

With this context in mind, let’s discuss the 6 best oil and gas stocks to buy according to billionaire Carl Icahn. We used the Q3 portfolio of Icahn to select his top energy stocks for the quarter. The stocks are ranked according to Icahn’s stake value in each holding.

To give readers more context on each company, we have also mentioned the Q3 earnings results, analyst ratings, and the hedge fund sentiment around each stock.

Best Oil and Gas Stocks to Buy According to Billionaire Carl Icahn

6. SandRidge Energy, Inc. (NYSE:SD)

Carl Ichan’s Stake Value: $62,693,000

Percentage of Carl Ichan’s 13F Portfolio: 0.27%

Number of Hedge Fund Holders: 17

Headquartered in Oklahoma, SandRidge Energy, Inc. (NYSE:SD) is an energy company that specializes in hydrocarbon exploration and is involved in the marketing and distribution of petroleum, natural gas, and natural gas liquids. As one of the top oil and gas stocks in his Q3 portfolio, Carl Icahn owns 4.81 million shares in SandRidge Energy, Inc. (NYSE:SD) as of the third quarter, worth $62.6 million, representing 0.27% of his total investments.

SandRidge Energy, Inc. (NYSE:SD) posted its Q3 results on November 9. EPS in the period equaled $0.78, which is an increase as compared to the -$1.36 EPS in the prior-year quarter. Revenue for the quarter totaled $46.58 million, up 68.3% year-over-year.

Carlo Cannell’s Cannell Capital is one of the leading SandRidge Energy, Inc. (NYSE:SD) stakeholders from Q3 2021, with 1.89 million shares valued at almost $25 million. Overall, 17 hedge funds in the database of Insider Monkey reported owning stakes in SandRidge Energy, Inc. (NYSE:SD) in the third quarter, down from 21 funds in the preceding quarter.

In addition to Southwest Gas Holdings, Inc. (NYSE:SWX), Occidental Petroleum Corporation (NYSE:OXY), and Cheniere Energy, Inc. (NYSE:LNG), SandRidge Energy, Inc. (NYSE:SD) is a notable energy stock in Carl Icahn’s Q3 portfolio.

5. Southwest Gas Holdings, Inc. (NYSE:SWX)

Carl Ichan’s Stake Value: $84,894,000

Percentage of Carl Ichan’s 13F Portfolio: 0.37%

Number of Hedge Fund Holders: 10

Southwest Gas Holdings, Inc. (NYSE:SWX) is a new addition in Carl Icahn’s portfolio from the third quarter, with the billionaire holding 1.26 million shares in Southwest Gas Holdings, Inc. (NYSE:SWX), worth $84.89 million, accounting for 0.37% of his total Q3 securities. Southwest Gas Holdings, Inc. (NYSE:SWX) is a Nevada-based investor-owned utility that is responsible for providing natural gas to over 2 million residential and industrial customers in Arizona, Nevada, and California.

It was revealed in a November 15 story that Icahn nominated 10 directors for Southwest Gas Holdings, Inc. (NYSE:SWX)'s board, to be elected in 2022. The company, however, is reluctant to continue with the decision because the board strongly believes that Icahn is trying to gain a controlling share of Southwest Gas Holdings, Inc. (NYSE:SWX) without paying the control premium to the shareholders. Previous reports suggest that Icahn Enterprises L.P. (NASDAQ:IEP) opened a tender offer on Southwest Gas Holdings, Inc. (NYSE:SWX) at $75 per share.

On November 9, Southwest Gas Holdings, Inc. (NYSE:SWX) announced its Q3 earnings, posting a Q3 EPS of $0.05, missing estimates by -$0.17. Revenue for the quarter totaled $888.70 million, up 321.51% from the prior-year quarter, outperforming estimates by $52.27 million.

Southwest Gas Holdings, Inc. (NYSE:SWX), on November 18, declared a quarterly cash dividend of $0.585 per share, payable on March 1 to shareholders of record on February 15.

Of the 10 hedge funds that were bullish on the stock in the third quarter, Mario Gabelli’s GAMCO Investors holds an almost $47 million position in Southwest Gas Holdings, Inc. (NYSE:SWX), making the fund one of the leading company stakeholders.

5. Delek US Holdings, Inc. (NYSE:DK)

Carl Ichan’s Stake Value: $134,085 ,000

Percentage of Carl Ichan’s 13F Portfolio: 0.59%

Number of Hedge Fund Holders: 13

Delek US Holdings, Inc. (NYSE:DK) is a Tennessee-based downstream energy company with interests in petroleum refining, logistics, asphalt, and renewable fuels. Carl Icahn holds a $134 million position in Delek US Holdings, Inc. (NYSE:DK) as of Q3 2021, which accounts for 0.59% of his total investments.

Delek US Holdings, Inc. (NYSE:DK), on November 4, posted its Q3 results. EPS in the period equaled $0.13, beating estimates by $0.47. The quarterly revenue came in at $2.96 billion, up 43.32% year-over-year, exceeding estimates by $479.89 million.

Stating that the stock is undervalued and has potential for financial growth, Goldman Sachs analyst Carly Davenport on October 14 upgraded Delek US Holdings, Inc. (NYSE:DK) to Buy from Neutral with a price target of $25, up from $19.

Ken Griffin’s Citadel Investment Group is one of the leading Delek US Holdings, Inc. (NYSE:DK) stakeholders from the third quarter, with 1.75 million shares worth $31.6 million. Overall, 13 hedge funds in the Q3 database of Insider Monkey reported owning stakes in Delek US Holdings, Inc. (NYSE:DK), down from 16 funds in the preceding quarter.

In addition to Southwest Gas Holdings, Inc. (NYSE:SWX), Occidental Petroleum Corporation (NYSE:OXY), and Cheniere Energy, Inc. (NYSE:LNG), Delek US Holdings, Inc. (NYSE:DK) is a notable energy stock in Carl Icahn’s Q3 portfolio.

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Disclosure: None. 6 Best Oil and Gas Stocks to Buy According to Billionaire Carl Icahn is originally published on Insider Monkey.