The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Ecopetrol S.A. (NYSE:EC).
Is Ecopetrol S.A. (NYSE:EC) the right pick for your portfolio? The best stock pickers were taking a bearish view. The number of bullish hedge fund bets went down by 4 in recent months. Ecopetrol S.A. (NYSE:EC) was in 7 hedge funds’ portfolios at the end of September. The all time high for this statistics is 16. Our calculations also showed that EC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 11 hedge funds in our database with EC positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 website. Now let’s take a peek at the recent hedge fund action encompassing Ecopetrol S.A. (NYSE:EC).
Hedge fund activity in Ecopetrol S.A. (NYSE:EC)
At third quarter’s end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -36% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EC over the last 21 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Ecopetrol S.A. (NYSE:EC), which was worth $74.9 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $8.8 million worth of shares. Two Sigma Advisors, Qtron Investments, and CSat Investment Advisory 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 Qtron Investments allocated the biggest weight to Ecopetrol S.A. (NYSE:EC), around 0.43% of its 13F portfolio. Quantamental Technologies is also relatively very bullish on the stock, earmarking 0.13 percent of its 13F equity portfolio to EC.
Because Ecopetrol S.A. (NYSE:EC) has witnessed falling interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of money managers that slashed their positions entirely heading into Q4. Intriguingly, Ken Griffin’s Citadel Investment Group dropped the biggest position of all the hedgies followed by Insider Monkey, valued at close to $1 million in stock, and Matthew Tewksbury’s Stevens Capital Management was right behind this move, as the fund sold off about $0.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 4 funds heading into Q4.
Let’s check out hedge fund activity in other stocks similar to Ecopetrol S.A. (NYSE:EC). We will take a look at Arthur J. Gallagher & Co. (NYSE:AJG), Alexandria Real Estate Equities Inc (NYSE:ARE), Nasdaq, Inc. (NASDAQ:NDAQ), Interactive Brokers Group, Inc. (NASDAQ:IBKR), Rogers Communications Inc. (NYSE:RCI), FleetCor Technologies, Inc. (NYSE:FLT), and China Unicom (Hong Kong) Limited (NYSE:CHU). This group of stocks’ market valuations are closest to EC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AJG | 35 | 320853 | 6 |
| ARE | 25 | 168133 | 7 |
| NDAQ | 32 | 220480 | 7 |
| IBKR | 28 | 787440 | -4 |
| RCI | 15 | 264156 | -1 |
| FLT | 40 | 1497542 | -13 |
| CHU | 6 | 49582 | -2 |
| Average | 25.9 | 472598 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.9 hedge funds with bullish positions and the average amount invested in these stocks was $473 million. That figure was $87 million in EC’s case. FleetCor Technologies, Inc. (NYSE:FLT) is the most popular stock in this table. On the other hand China Unicom (Hong Kong) Limited (NYSE:CHU) is the least popular one with only 6 bullish hedge fund positions. Ecopetrol S.A. (NYSE:EC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EC is 15.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on EC as the stock returned 23.3% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
