Simmons & Co. International reports the institutional ownership of energy equity as of first-quarter 2010 was underweight by 29 basis points (2.9%). This compares to the fourth quarter of 2009 when the 13(f) institutional holdings of energy equities were underweight by 360 basis points.
Institutional portfolio weightings of energy-sector securities decreased marginally (less than 5 basis points) quarter-over-quarter to 7.9%. The extreme underweight position continues to be somewhat illusory, according to Simmons & Co., as it is driven by the massive market cap of the major/integrated subsector, where 13(f) institutions were underweight by 250 basis points.
Major/integrated institutional ownership weighting remained flat with the S&P 500 (down 50 basis points to 6.3%) decreasing its weighting, according to Simmons & Co. Institutions net sold $858 million of major/integrated equity after purchasing $2.9 billion during fourth-quarter 2009.
In oil services, the S&P 500 weighting remained flat at 1.8% in the first quarter. Institutional investors also held oil-service weighting flat as well at 1.7% and remained underweight the S&P by 10 basis points.
Institutional investors net sold $32.1 billion of oil-service equity during the first quarter, less than the $39.2 billion of net sales during the fourth quarter. An equally weighted index of oil service companies rose 5.4% (up 7.9% in the fourth quarter). The subsector outperformed the S&P 500, which returned +4.9%.
For E&Ps, the S&P 500 weighting decreased 20 basis points to 2.1%. Institutional investors remained underweight (-10 basis points) the S&P. During the first quarter, they divested $36 billion (8.5% of E&P market cap) of equity from their portfolios. An equally weighted index of E&Ps declined 0.3% (+8.8% in the fourth quarter). The subsector underperformed the S&P 500, which returned +4.9%.
New York-based BlackRock Institutional Trust Co. remains the largest holder of energy equity, with $57.7 billion as of March 31. This accounts for 7.7% of its portfolio and includes holdings in 157 energy stocks. BlackRock held $28 billion in major/integrated, $14.2 billion in E&Ps and $11.9 billion in oil services.
Legal & General Investment Management (UK) is now the most heavily weighted firm in the Top 10 towards energy with 15.3% of its holdings in the sector, according to Simmons & Co. The firm added 530 basis points compared to fourth-quarter 2009. The other top institutional investors are BlackRock Investment Management with 14.8% of its portfolio in energy, Wellington Management Co. with 11.2% of its portfolio and Columbia Management Advisors with 10.9% invested in energy.
The top 10 energy holders combined to net purchase $14.4 billion of energy equity during the quarter.
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