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Is ConocoPhillips (COP) Approaching a Free Cash Flow Inflection?

By Soumya Eswaran | September 01, 2025, 8:31 AM

Cullen Capital Management, LLC, operating under the name Schafer Cullen Capital Management, Inc. (SCCM), has released its “SCCM Enhanced Equity Income Fund” second-quarter investor letter. A copy of the letter can be downloaded here. US equities surged in the second quarter, with the S&P 500 gaining 10.9% while the Russell 1000 Value was up 3.8%. The composite underperformed both of its benchmarks in the second quarter, returning -1.2% (net) compared to a 1.9% return by the S&P 500 Buy-Write Index (BXM) and a 3.7% return by the SPDR Bloomberg High Yield Bond ETF (JNK). In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second-quarter 2025 investor letter, SCCM Enhanced Equity Income Fund highlighted stocks such as ConocoPhillips (NYSE:COP). ConocoPhillips (NYSE:COP) produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG), and natural gas liquids. The one-month return of ConocoPhillips (NYSE:COP) was 6.69%, and its shares lost 13.02% of their value over the last 52 weeks. On August 29, 2025, ConocoPhillips (NYSE:COP) stock closed at $98.97 per share, with a market capitalization of $123.608 billion.

SCCM Enhanced Equity Income Fund stated the following regarding ConocoPhillips (NYSE:COP) in its second quarter 2025 investor letter:

ConocoPhillips (NYSE:COP) – The stock was purchased in the strategy during the quarter. ConocoPhillips is a leading independent exploration and production company with a global portfolio of low-cost, high-return assets and a disciplined capital allocation strategy. The company is approaching a free cash flow inflection as capital spending on major long-cycle projects begins to roll off in 2H25, improving its ability to return capital to shareholders. Management targets returning approximately 45% of operating cash flow through dividends and buybacks, supported by efficiency gains and a strong balance sheet. COP trades at 14.4x 2025 EPS and offers an ~8% capital return yield, presenting an attractive entry point amid a constructive long-term oil backdrop.

ConocoPhillips (NYSE:COP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 72 hedge fund portfolios held ConocoPhillips (NYSE:COP) at the end of the second quarter, which was 70 in the previous quarter. While we acknowledge the potential of ConocoPhillips (NYSE:COP) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered ConocoPhillips (NYSE:COP) and shared the list of most undervalued low volatility stocks to buy. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

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

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