Smead Value Fund Rides Out-of-Favor Energy Stocks for Success

The Smead Value Fund, a successful value-investing fund, has allocated 21% of its assets to the energy sector, which is significantly higher than the 3% weighting in the S&P 500. The fund has beaten the Russell 1000 Value Index over five, 10, and 15 years. The fund's manager is betting big on out-of-favor energy stocks, including Conoco and APA.

The Smead Value Fund, a prominent value-investing fund, has allocated a significant portion of its assets to the energy sector, with a 21% weighting, which is notably higher than the 3% in the S&P 500. This strategic allocation reflects the fund's manager's bullish stance on out-of-favor energy stocks, including Conoco and APA. The fund has consistently outperformed the Russell 1000 Value Index over five, 10, and 15 years, demonstrating its track record in value investing.

According to the latest data, the fund's energy holdings are substantial, with a significant portion held by institutional investors [1]. The top institutional holders of CVE (Chevron Corporation) include Capital World Investors, Vanguard Group Inc., and Capital International Investors, among others. These institutions have shown confidence in the energy sector's potential for long-term value creation, despite current market conditions.

SLB (Schlumberger Limited), a key player in the energy sector, recently reported its financial results for the second quarter of 2025. The company showcased a resilient performance amidst economic challenges, with a revenue increase of 1% sequentially but a 6% decline year-on-year. Despite these challenges, SLB's earnings per share (EPS) surpassed analyst expectations, highlighting the company's ability to navigate difficult market conditions [2].

The energy sector is undergoing significant consolidation, as evidenced by Chevron's $53 billion acquisition of Hess Corporation. This strategic move aims to secure high-margin, long-life assets and diversify Chevron's portfolio. The acquisition of Hess's Bakken shale assets and the 30% stake in the Stabroek Block offshore Guyana underscores Chevron's focus on scale, diversification, and resilience [3]. This deal is part of a broader trend in the energy sector, where companies are seeking to consolidate resources and mitigate risk.

Investors have shown interest in energy stocks, with one fund allocating a significant portion of its holdings to the sector. The Smead Value Fund's manager is betting big on out-of-favor energy stocks, positioning the fund to benefit from potential market corrections and long-term growth opportunities. The fund's track record in value investing, coupled with its strategic allocation to the energy sector, makes it an intriguing option for investors seeking exposure to the sector.

References:
[1] https://finance.yahoo.com/quote/CVE/holders/
[2] https://www.ainvest.com/news/slb-reports-1-revenue-increase-sequentially-economic-challenges-2507/
[3] https://www.barrons.com/articles/value-investing-energy-stocks-oil-a188fded