BP Picks Up Supporters

Todd Shriber
 
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With the end of the second quarter about 50 days behind us, one of investors' favorite pastimes has been renewed and that is scouring the headlines for news of what stocks legendary investors and big-time hedge fund managers were loading up on in the quarter. That information comes courtesy of the SEC's 13F filing, which money managers are required to file if they manage more than $100 million in client capital.

Some of the 13F's that have come in over the past couple of days have not contained many surprises. Warren Buffett did some shopping here and there. John Paulson still loves gold, but appears to have grown frustrated with the performance of select financial services names. However, one stock that is making the rounds in a few 13F filings, believe it or not, is BP, Europe's second-largest oil company.

Making for even more compelling talk about BP are some of the hedge fund managers that have taken a shining to the British oil giant's shares. Heading into the start of trading on Tuesday, BP's U.S.-listed shares were up about 9.5% in the past year. Not a dreadful performance all things considered and pretty darn good when measured against Petrobras (PBR). Then again, BP's three biggest rivals, Royal Dutch Shell, Exxon Mobil (XOM) and Chevron, have all left in BP shares in the dust since August 2010.

In the case of Shell (RDS-A) and Exxon, they have offered double the returns of their British rival. Chevron (CVX) has tripled BP's performance. That did not stop Seth Klarman of Baupost Capital from adding BP to his fund's portfolio in Q2. Klarman, to whom the tag ''legendary value investor'' applies, went from not owning BP at all at the end of Q1 to counting the stock among his top-five holdings as of June 30.

Here is another interesting one for you: Thomas Steyer's $20 billion Farallon Capital Management also took a new stake in BP in the second quarter. What is interesting about Steyer investing in BP is that not only is he a noted investor, he is also active in environmental causes. Several years ago, he and his wife donated millions of dollars to create a sustainable energy center at Stanford University, according to TheStreet.com.

It sure would be interesting to sit down with Klarman and Steyer and just pick their brains about what they see in BP (BP). What is easy to see with the company is what Jim noted earlier this week: BP is spending $2.4 million a day on five rigs in the Gulf of Mexico that are not doing anything. That full commentary can be viewed (HERE).

BP, which has seen its Gulf production tumble to 250,000 barrels per day from 390,000 before the Deepwater Horizon disaster, has not even filed for new permits with U.S. regulators to start new Gulf projects. Not surprisingly, a money manager quoted by Bloomberg today said ''If BP can recommence in the Gulf, it will lift shares.''

That is probably an accurate statement, but it begs the question: When is BP's Gulf production going to resemble pre-spill levels again? That is the $62 question. Sixty-two as in roughly the highest price BP's U.S. shares traded at before the spill and the same price the stock has yet to even flirt with since.

Todd Shriber

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