In the first quarter of 2005, when oil prices soared, everyone assumed that institutional investors that were buying energy equities must have been overweight in the energy sector. Surprisingly, they were underweight compared with the weighting of energy in the Standard & Poor's 500. That's according to data from Thomson Financial that was analyzed by the E&P analysis team at Simmons & Co. International in Houston. "The number of 13(f) institutions that had at least a 10% weighting in energy among the top 100 energy investors by portfolio weight doubled to 35 from 17 [in the prior quarter]," Simmons reports. "But 13(f) institutions as a whole were underweight relative to the S&P 500." This was despite the fact that energy-related stocks provided exceptional returns and outperformed the S&P 500 in the process. First-quarter earnings were noteworthy, Simmons says, as 80% of the service-sector stocks it covers beat Wall Street analysts' consensus earnings estimates. But investors remain anxious about where oil prices are headed and how they may affect the economy, so energy stocks in the second quarter were down from the peaks they reached in the first quarter. In the first quarter, refining stocks performed best, rising an aggregate 32%. The E&P subsector rose 19.3%. The coal subsector rose 14.2% and the oil-service sector rose 13.3%. The S&P 500 fell 2.6%. In the quarter, West Texas Intermediate oil prices rose 18% and Henry Hub spot gas prices increased 24%. The 13(f) institutions bought almost $2.9 billion worth of E&P stocks during the quarter. The largest holders of E&P equities were Capital Research and Management, Fidelity and Barclays Bank. Fidelity was the largest net seller for the second consecutive quarter, however, selling $564 million of E&P equities. Despite those sales, the Boston-based company still owned shares of 42 E&P companies worth about $9 billion.