Institutional investors took some profits from their pure-play shale gas stock holdings in the second quarter, benefiting from the run-up in the share prices of Marcellus, Utica and Haynesville shale drillers.
Index fund manager State Street Global Advisors Inc. was a leader in the profit-taking, according to second-quarter institutional investor filings with the SEC. State Street was one of the top three sellers of stocks in six of 10 companies, ranging from New York integrated gas company National Fuel Gas Co., whose shares gained 15% during the quarter, to big gainers such as EQT Corp. and Range Resources Corp., both of which more than doubled in value.
The misery of the nation's oil drillers was a balm for beaten-down stocks of shale gas producers. Cutbacks in oil drilling because of the coronavirus collapse in demand slashed the amount of "free" gas associated with oil wells and flowing to the national market, strengthening future natural gas prices and outlooks. Investors piled into shale gas stocks as yearslong cost-cutting measures found a grip at the same time that higher gas prices, and potential profits, appeared on the horizon.
Value investment fund manager Southeastern Asset Management Inc., a longtime natural gas investor, joined the bigger funds in profit-taking by trimming its stake in Appalachian producer CNX Resources Corp., telling investors that CNX's 63% gain boosted the returns of Southeastern's Longleaf Partners Funds.
"Our relative energy overweight and better stock-specific performance by natural gas company CNX and pipeline operator [Williams Cos. Inc.] were a bright spot for absolute and relative performance," Southeastern said in a letter to investors. "We have built on lessons learned in previous downturns in that industry and avoided optically discounted oil companies.
"While it had been a painful wait to see CNX outperform, at long last natural gas sentiment shifted positively due to a variety of hard-to-foresee factors," Southeastern said. Southeastern sold 23% of its stake in CNX but still has CNX as a top 10 holding with a 20% stake in the Appalachian driller.
