Activist hedge fund D.E. Shaw & Co. LP is washing its hands of the oilfield services stocks it bought on the dip earlier this year after the rig operators and frack crew providers' revenues crumbled as their customers stopped drilling in reaction to rock bottom crude oil prices.
After selling 88% of its stake in Schlumberger Ltd. and 64% of its holdings in Halliburton Co. in the second quarter, in the third quarter, D.E. Shaw dumped 95% of its shares in offshore driller Transocean Ltd., 49% of its stake in Patterson-UTI Energy Inc. and 36% of fracking services provider TechnipFMC PLC, according to SEC filings. D.E. Shaw then added to its position in Schlumberger in the third quarter.
About 5% of D.E. Shaw's $71 billion portfolio is in energy and utilities, according to S&P Global Market Intelligence data, and the fund continues to be more heavily invested in energy infrastructure — renewables, wires and pipes — than oil and gas production. Much of its trading activity in this tumultuous year for oil and gas has been dipping in and out of oil and gas issues whose share prices are cheap.
The third quarter was no different, according to institutional investor information filed with the SEC. D.E. Shaw loaded up on historically low-priced shares of midsized exploration and production companies, such as Apache Corp. and Diamondback Energy Inc., while selling stakes in larger exploration and production companies, such as Marathon Oil Corp. and ConocoPhillips.
At the same time that D.E. Shaw was dabbling in the oil patch, many of its newest energy stakes in the third quarter were power plays: Brookfield Renewable Corp., Vistra Corp. and Dominion Energy Inc.
In the same quarter, the fund dumped its stakes in electric utility PG&E Corp. and independent power producer AES Corp.