We recently published a list of the 15 Small-Cap Energy Stocks Hedge Funds Are Buying. In this article, we are going to take a look at where Pembina Pipeline Corporation (NYSE:PBA) stands against other small-cap energy stocks.

On April 12, Bill Perkins, Skylar Capital Management CEO, appeared on ‘Closing Bell Overtime’ on CNBC to talk about how the energy sector is struggling due to fears of decreased fuel demand. Perkins discussed that the trade policy majorly drives the sentiment across the energy landscape and hence affects natural gas, energy stocks, bonds, and other related assets. Noting the difficulty in predicting the long-term outcome of these policies, he questioned whether the tariffs are temporary. The conversation then shifted to the impact of recent tariff announcements. Perkins acknowledged that natural gas prices initially performed better than other commodities following the announcements, which gives rise to speculations that LNG could become a key bargaining chip in future trade negotiations. He explained that, at the time, natural gas fundamentals were strong, and the US had the potential to use LNG exports as a diplomatic tool to help reduce trade deficits with other countries.

However, Perkins acknowledged that the overarching macroeconomic fear of a global slowdown soon overshadowed these fundamentals, which affected both the crude oil and natural gas markets. As a result, prices dropped to levels that might stimulate some demand and offer a buffer against further declines, particularly if the tariff conflict drags on and risks pushing the economy into a recession or even a depression. Perkins also addressed the effect of price pressure on production, specifically referencing West Texas Intermediate (WTI) crude oil. He pointed out that WTI prices had reached a threshold (~$60 per barrel) where growth in the Permian Basin would likely halt or even decline. At these price levels, producers become reluctant to invest in new drilling, especially given the backwardated crude curve, which showed future prices at $58 to $59 per barrel.  This scenario would not only limit oil production growth in the Permian but also reduce the output of associated natural gas from the region. Perkins described this production restraint as a bullish factor that could help offset some of the prevailing uncertainty.

Perkins predicted that oil and gas executives would adopt a cautious tone in their commentary. He explained that, due to the unpredictability of the global macro environment, executives would likely let market signals guide their decisions about ramping up or scaling back drilling programs.

Our Methodology

We first sifted through the Finviz stock screener and Insider Monkey’s Q4 2024 hedge funds database. For this article, we define small-cap stocks as those that trade between $10 billion and $30 billion. We then selected the top 15 stocks according to hedge funds and ranked them in ascending order of the number of hedge funds that have stakes in them. In cases where an equal number of hedge funds held two or more stocks, we used the market cap as a tiebreaker.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Aerial shot of an offshore oil platform, the orange hue of the ocean water and the steel structure representing the company’s extensive oil and gas production.

Pembina Pipeline Corporation (NYSE:PBA)

Market Capitalization as of April 25: $22.38 billion

Number of Hedge Fund Holders: 17

Pembina Pipeline Corporation (NYSE:PBA) provides energy transportation and midstream services. It has 3 segments: Pipelines, Facilities, Marketing & New Ventures, and Corporate & Income Tax. The Pipelines segment operates conventional, oil sands & heavy oil, and transmission assets with a transportation capacity of 3.0 million BOE per day, the ground storage capacity of 10 million barrels, and rail terminalling capacity of ~105 thousand BOE per day.

The company announced several important developments in Q4 2024, such as entering into agreements for a 50% interest in the Greenlight Electricity Centre Limited Partnership, which is developing a power generation facility to serve the ballooning data centers industry. Pembina’s Pipelines segment saw increased contributions due to the fully consolidated ownership of Alliance, which brought higher revenue from increased ownership and greater demand for seasonal contracts.

Overall, the Pipelines segment benefited from ~170,000 BOE per day of incremental or renewed transportation contracts, primarily on Alliance and Peace Pipeline, as well as 25,000 barrels per day on the NEBC pipeline. The company is now growing this segment through projects like the Taylor to Gordondale project (currently in the regulatory process).

Overall, PBA ranks 13th on our list of the small-cap energy stocks hedge funds are buying. While we acknowledge the growth potential of PBA as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than PBA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

 

Disclosure: None. This article is originally published at Insider Monkey.