BP's Deepwater Horizon disaster and falling oil prices crushed shares of energy companies in the second quarter, attracting the attention of some of the hedge fund industry's sharpest long-term investors.
Top managers including billionaire Carl Icahn, Eric Mindich and Dinakar Singh, whose stock picks are closely watched in investment circles, added energy stocks to their holdings as billions of gallons of oil gushed into the Gulf, according to quarterly securities reports filed on Monday.
Fund managers must say what they owned 45 days after the quarter ends.
While energy stocks ranked among the worst performers during a quarter that also featured a still unexplained flash-crash and fresh fears that the U.S. economy would recover more slowly, hedge fund managers staked out the sector much like they had with financial firms earlier in the year.
After building his energy holdings slowly at the beginning of the year, Icahn picked up the pace in April, May and June by committing nearly $1 billion to the sector after BP's
The purchases included 2 million shares of oil and gas producer Anadarko Petroleum
Dinakar Singh's hedge fund TPG-Axon bought 1.4 million shares of Anadarko, while adding 2.1 million shares of drilling services specialist Baker Hughes
Mindich, whose skills at Goldman Sachs helped him raise a record $3 billion when he started his fund in 2004, bought 1.3 million shares of BP and call options to buy 1 million more.
Mindich's $13 billion Eton Park Capital also bought 168,000 shares of Baker Hughes, 165,000 shares of Diamond Offshore Drilling
The bets mark a dramatic change in their portfolios, coming as many other investors pulled their money out. BP's stock price fell over weeks until its value had fallen by half.
Even prominent mutual fund manager Fidelity Investments, where millions of Americans hold their college savings and retirement accounts, appears to have joined the trend.
Fidelity managers added 24.2 million shares of Exxon, leaving it with 74.9 million shares, making it the fifth biggest holding for Fidelity. It also added 10.9 million shares of BP.
The forms managers filed on Monday include only U.S.-listed equity securities and related derivatives. Bonds, other securities and short positions are typically not disclosed. Managers may also omit U.S.-listed equities under certain circumstances or file some holdings on confidential filings.
(Reporting by Svea Herbst-Bayliss and Aaron Pressman. Additional reporting by Emily Chasan in New York and Ross Kerber in Boston. Editing by Robert MacMillan)