Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. Between November 1, 2014 and October 30 of this year, less than 49% of the stocks in the S&P 500 beat the market. However, hedge funds’ top 30 stock picks from the index had a much higher success rate than this, at 63%. The returns from these 30 stocks also easily bested the broader market, at 9.5% compared to 5.2%, despite there being a few duds in there like Micron and Anadarko (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Is CONSOL Energy Inc. (NYSE:CNX) an exceptional investment now? Prominent investors are in a bullish mood. The number of long hedge fund positions increased by 2 recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Cooper Tire & Rubber Company (NYSE:CTB), Primerica, Inc. (NYSE:PRI), and Banco Macro SA (ADR) (NYSE:BMA) to gather more data points.
Follow Cnx Resources Corp (NYSE:CNX)
Follow Cnx Resources Corp (NYSE:CNX)
Now, we’re going to take a look at the recent action encompassing CONSOL Energy Inc. (NYSE:CNX).
How have hedgies been trading CONSOL Energy Inc. (NYSE:CNX)?
At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Southeastern Asset Management, managed by Mason Hawkins, holds the number one position in CONSOL Energy Inc. (NYSE:CNX). Southeastern Asset Management has an $454.7 million position in the stock, comprising 3.8% of its 13F portfolio. On Southeastern Asset Management’s heels is David Einhorn of Greenlight Capital, with an $290.2 million position; 4.8% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions consist of Bill Miller’s Legg Mason Capital Management, Steven Richman’s East Side Capital (RR Partners) and Israel Englander’s Millennium Management.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the most outsized position in CONSOL Energy Inc. (NYSE:CNX). Marshall Wace LLP had $9.3 million invested in the company at the end of the quarter. Chao Ku’s Nine Chapters Capital Management also made an $1.3 million investment in the stock during the quarter. The other funds with brand new CNX positions are John Overdeck and David Siegel’s Two Sigma Advisors, Joe DiMenna’s ZWEIG DIMENNA PARTNERS, and Phil Frohlich’s Prescott Group Capital Management.
Let’s go over hedge fund activity in other stocks similar to CONSOL Energy Inc. (NYSE:CNX). These stocks are Cooper Tire & Rubber Company (NYSE:CTB), Primerica, Inc. (NYSE:PRI), Banco Macro SA (ADR) (NYSE:BMA), and Companhia Energetica Minas Gerais (ADR) (NYSE:CIG). All of these stocks’ market caps are closest to CNX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTB | 23 | 121036 | -3 |
| PRI | 15 | 265573 | -3 |
| BMA | 13 | 66701 | -1 |
| CIG | 11 | 24330 | 0 |
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $119 million. That figure was $894 million in CNX’s case. Cooper Tire & Rubber Company (NYSE:CTB) is the most popular stock in this table. On the other hand Companhia Energetica Minas Gerais (ADR) (NYSE:CIG) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks CONSOL Energy Inc. (NYSE:CNX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
