Some funds that got out of oil early start moving back in

Oil is heading where?   

Few mutual fund managers pulled out of oil stocks before the price of crude began plummeting in the fall of 2014, according to Morningstar data. Now, some of those who sidestepped the more than 25 percent decline in energy since September are starting to jump back in.

Their reasoning: the sharp decline in oil prices to six-year lows is already reflected in stock prices, leaving shares primed to stage a rally.

"We're not being too cavalier: some leveraged companies are going to die, and we're trying to pick our spots carefully," said Jayme Wiggins, lead portfolio manager of the $542 million Intrepid Small Cap fund.

Wiggins cut his energy exposure by 62 percent over the first six months of 2014. Yet since the start of 2015, he's added four energy companies to his portfolio, including SM Energy Co, a $2.2 billion market cap drilling company whose shares have dropped 41 percent over the last 3 months, he said.

How to profit off of oil now
How to profit off of oil now   

Overall, 450 out of the more than 3,200 U.S. stock mutual funds reduced their exposure to energy stocks by 20 percent or more between January and September of last year, according to Morningstar data, by an average of 40 percent.

Not all of those funds reaped outsized benefits from moving away from oil, however. During a year in which the broad stock market rose about 11 percent before dividends thanks to a more than 25 percent rally in utility and healthcare stocks, some fund managers who sold energy at an opportune time found it was not enough to boost their performance. Wiggins's fund, for example, gained less than a percentage point last year, putting it in the bottom half of its peers.

Read MoreOil: Why nobody knows how low it will go

Those that did profit from their call on oil were funds like the $125 million Nuveen Large-Cap Core fund, which moved into retailers and airline companies that benefited from the decline in oil prices. The fund gained 16.4 percent last year, putting it among the best performers in the 1,656 large-cap funds in its Morningstar category.

Bob Doll, the manager of the Nuveen fund, said that he expected to stay away from energy for the foreseeable future.

"The fundamentals are still so bad that I'm not tempted a whole lot. I'm still at the point where I would rather own the beneficiary of the energy price decline than try to catch a falling knife," he said.

Hoping for a rebound

With companies starting to release their fourth quarter results, many investors remain concerned that the damage of the sharp oil decline could spur companies to cut dividends or reduce their forecasts, pushing shares lower.

An employee walks between lines of oil barrels at a Royal Dutch Shell Plc plant.
5 ways to play oil's drop   

Yet some fund managers that sold out of their energy positions think the worst is over.

Robert Bacarella, lead portfolio manager of the $54 million Monetta fund, completely got out of energy stocks over the first six months of last year after becoming concerned with their chart-based trading patterns.

Lately, he's been eyeing such large-cap companies as oilfield servicer Baker Hughes, whose shares are up 3 percent over the last 3 months, and oil producer EOG Resources, whose shares are up 2 percent over the same time. Shares of these companies seem to be forming a floor, a term in technical analysis which suggests that the stocks are back on an upward trend.

"We're starting to see these stocks getting oversold as the market takes out the good with the bad," Bacarella said.

William Nygren, lead portfolio manager of the $17.3 billion Oakmark I fund, said on CNBC Wednesday that he recently added a position in Chesapeake Energy. The company has a strong balance sheet and is buying back shares, which should help its share price rebound if oil goes back toward $70 a barrel, Nygren said.

His fund had cut its energy exposure by 23 percent in 2014, according to Morningstar data.

Peter Andersen, lead portfolio manager of the $16 million Congress All-Cap Opportunity fund, said that he is waiting for the yields of junk bonds issued by energy companies to tighten compared with Treasury bonds before buying again.

In late December, yields of high-yield bonds jumped to 7.7 percentage points higher than Treasuries, according to Bank of America Merrill Lynch data. At the end of August, high-yield bonds offered yields just 3.7 percentage points more than Treasuries.

"We followed the signs that the bond market was flashing when we sold, and we're going to wait for the bond market to signal that we're close to a bottom before moving back in," he said.