43 hedge fund portfolios hold Kosmos Energy, up from 21, after Q2 crude weakness. Hotchkis & Wiley keeps the stock and expects months of undersupply.
Alpha Score of 44 reflects weak overall profile with moderate momentum, poor value, moderate quality, moderate sentiment.
Kosmos Energy dragged on the Hotchkis & Wiley Mid-Cap Value Fund's second-quarter return. Crude prices weakened after the Strait of Hormuz reopened, and the deepwater producer's shares fell with them. The fund kept its position.
The fund returned 4.74% in the quarter, trailing the Russell Midcap Value Index's 13.4%. Energy and technology stock selection accounted for most of the gap; healthcare picks added. The quarter's gains were concentrated in AI and semiconductor names, several up more than 100%, a narrow leadership the fund's value holdings did not share. The manager favors quality businesses at attractive valuations and has said AI-related fears are overstated.
Kosmos is an "independent offshore E&P company with producing assets in the US Gulf of Mexico and Ghana," the manager wrote. The fund owns it for its offshore operating expertise, quality assets, attractive reinvestment economics, and compelling valuation, which it says create a favorable risk/reward profile.
"The stock declined during Q2 due to broader crude oil price weakness following the reopening of the Strait of Hormuz," the fund wrote. The manager added that "oil undersupply could continue for months and that prices could remain above normal levels, even if the reopening progresses smoothly." The crude oil profile tracks the commodity.
Shares closed at $2.53 on Aug. 3, up 14.5% over the past month and 37.5% over 52 weeks. The company's market value is $1.5 billion. The KOS stock page has the latest price action.
At the end of the first quarter, 43 hedge fund portfolios held Kosmos Energy, up from 21 three months earlier. The stock had been a material contributor to the fund's first-quarter performance before the crude slump.
The fund cited strong assets, high returns on investment, attractive valuation, and reduced liquidity concerns. "Our investment thesis remains intact," it wrote.
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