Evercore ISI Highlights Negative-Beta Stocks as September Volatility Hedge

According to CNBC, Evercore ISI said investors can use stocks that have historically moved opposite the broader market to help cushion portfolios against September volatility. The firm screened S&P 500 names with negative beta over the past six months and found 115 stocks in September, down from 121 in August, then narrowed the list to 20. Evercore said financials, utilities, consumer staples and energy made up almost 70% of the stocks at the top of the screen. Evercore ISI strategist Julian Emanuel said buying negative-beta stocks can help a long-term portfolio ride out volatility events, citing interest rates, geopolitics and the midterm election as possible catalysts. The firm described energy stocks as a synthetic S&P 500 put option because of their link to oil prices and geopolitical pressure on the broader market. Among the names highlighted, Occidental Petroleum had a six-month beta of negative 1.23, the fourth-most negative among the 20 stocks Evercore identified. Analyst Stephen Richardson rates Occidental outperform. The Houston-based oil and gas producer recently reported $3 billion of free cash flow before working capital from continuing operations, its highest since the third quarter of 2022, and said it cut debt by $1.9 billion to $11.8 billion in the quarter. Chevron had a beta of negative 0.90 and also carries an outperform rating from Richardson. The company said Wednesday it plans to more than double production in Venezuela over the next five years through a $7 billion investment, lifting output to 600,000 barrels a day by 2031 from 280,000 bpd currently. Evercore also cited Kroger and Altria among defensive consumer staples names.