The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider ConocoPhillips (NYSE:COP) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
ConocoPhillips (NYSE:COP) was in 50 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 70. COP has experienced a decrease in support from the world’s most elite money managers lately. There were 51 hedge funds in our database with COP holdings at the end of March. Our calculations also showed that COP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Donald Sussman of Paloma Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a gander at the latest hedge fund action surrounding ConocoPhillips (NYSE:COP).
Do Hedge Funds Think COP Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 50 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -2% from the first quarter of 2020. By comparison, 44 hedge funds held shares or bullish call options in COP a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Ken Fisher’s Fisher Asset Management has the most valuable position in ConocoPhillips (NYSE:COP), worth close to $340.5 million, amounting to 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which holds a $337.4 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism include Ken Griffin’s Citadel Investment Group, Donald Yacktman’s Yacktman Asset Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Elm Ridge Capital allocated the biggest weight to ConocoPhillips (NYSE:COP), around 5.9% of its 13F portfolio. Hi-Line Capital Management is also relatively very bullish on the stock, setting aside 3.45 percent of its 13F equity portfolio to COP.
Due to the fact that ConocoPhillips (NYSE:COP) has witnessed declining sentiment from the smart money, logic holds that there were a few hedge funds who were dropping their entire stakes last quarter. It’s worth mentioning that Vince Maddi and Shawn Brennan’s SIR Capital Management cut the largest stake of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $18.7 million in stock, and Randall Smith’s Alden Global Capital was right behind this move, as the fund dropped about $2.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as ConocoPhillips (NYSE:COP) but similarly valued. We will take a look at The TJX Companies, Inc. (NYSE:TJX), Cigna Corporation (NYSE:CI), Enbridge Inc (NYSE:ENB), The PNC Financial Services Group Inc. (NYSE:PNC), Brookfield Asset Management Inc. (NYSE:BAM), Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR), and FedEx Corporation (NYSE:FDX). This group of stocks’ market valuations are closest to COP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TJX | 56 | 2387336 | -7 |
| CI | 63 | 2807451 | 10 |
| ENB | 19 | 166071 | -3 |
| PNC | 38 | 727612 | -1 |
| BAM | 34 | 1657528 | 0 |
| PBR | 25 | 2799044 | -2 |
| FDX | 61 | 2170185 | -2 |
| Average | 42.3 | 1816461 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.3 hedge funds with bullish positions and the average amount invested in these stocks was $1816 million. That figure was $1159 million in COP’s case. Cigna Corporation (NYSE:CI) is the most popular stock in this table. On the other hand Enbridge Inc (NYSE:ENB) is the least popular one with only 19 bullish hedge fund positions. ConocoPhillips (NYSE:COP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for COP is 60.7. 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. 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 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on COP as the stock returned 16% since the end of Q2 (through 10/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
