ConocoPhillips (COP) Fell Out Of Favor With Hedge Funds

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards ConocoPhillips (NYSE:COP) to find out whether there were any major changes in hedge funds’ views.

Is ConocoPhillips (NYSE:COP) an attractive stock to buy now? Money managers were cutting their exposure. The number of bullish hedge fund positions shrunk by 1 recently. ConocoPhillips (NYSE:COP) was in 49 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 70. Our calculations also showed that COP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 50 hedge funds in our database with COP holdings at the end of June.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a gander at the recent hedge fund action encompassing ConocoPhillips (NYSE:COP).

Ken Heebner of Capital Growth Management

Do Hedge Funds Think COP Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 49 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards COP over the last 25 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Among these funds, Fisher Asset Management held the most valuable stake in ConocoPhillips (NYSE:COP), which was worth $403.6 million at the end of the third quarter. On the second spot was Adage Capital Management which amassed $387.6 million worth of shares. Citadel Investment Group, Laurion Capital Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Elm Ridge Capital allocated the biggest weight to ConocoPhillips (NYSE:COP), around 6.86% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, dishing out 3.87 percent of its 13F equity portfolio to COP.

Due to the fact that ConocoPhillips (NYSE:COP) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedge funds that decided to sell off their entire stakes in the third quarter. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management dropped the biggest investment of all the hedgies watched by Insider Monkey, worth about $27 million in stock. Robert Bishop’s fund, Impala Asset Management, also sold off its stock, about $11.7 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 1 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as ConocoPhillips (NYSE:COP) but similarly valued. These stocks are Analog Devices, Inc. (NASDAQ:ADI), U.S. Bancorp (NYSE:USB), Gilead Sciences, Inc. (NASDAQ:GILD), PetroChina Company Limited (NYSE:PTR), Automatic Data Processing, Inc. (NASDAQ:ADP), Uber Technologies, Inc. (NYSE:UBER), and Altria Group Inc (NYSE:MO). All of these stocks’ market caps are similar to COP’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 58.4 hedge funds with bullish positions and the average amount invested in these stocks was $4450 million. That figure was $1371 million in COP’s case. Uber Technologies, Inc. (NYSE:UBER) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 7 bullish hedge fund positions. ConocoPhillips (NYSE:COP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for COP is 40.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately COP wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); COP investors were disappointed as the stock returned 4.1% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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