Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. That’s why we pay special attention to hedge fund activity in these stocks. However, their activity in large-cap stocks also reveal good entry points from time to time.
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In this article we will take a look at overall hedge fund activity and determine whether Exxon Mobil Corporation (NYSE:XOM) is a good investment right now according to the smart money? Our calculations showed that the best stock pickers are becoming less confident. The number of long hedge fund bets shrunk by 6 in recent months. Exxon Mobil Corporation (NYSE:XOM) was in 61 hedge funds’ portfolio at the end of the third quarter of 2015. There were 67 hedge funds in our database with Exxon Mobil Corporation (NYSE:XOM) positions at the end of the previous quarter. At the end of this article, we will also compare Exxon Mobil Corporation (NYSE:XOM) to other similarly valued stocks including Wells Fargo & Co (NYSE:WFC), Johnson & Johnson (NYSE:JNJ), Facebook Inc (NASDAQ:FB), and General Electric Company (NYSE:GE) to get a better sense of its relative popularity.
Follow Exxon Mobil Corp (NYSE:XOM)
Follow Exxon Mobil Corp (NYSE:XOM)
In the 21st century investor’s toolkit there are a multitude of gauges market participants can use to appraise publicly traded companies. A duo of the most under-the-radar gauges are hedge fund and insider trading signals. Our research have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the S&P 500 by a solid amount (see the details here).
Keeping this in mind, we’re going to check out the latest action surrounding Exxon Mobil Corporation (NYSE:XOM).
How are hedge funds trading Exxon Mobil Corporation (NYSE:XOM)?
At the end of Q3, a total of 61 of the hedge funds tracked by Insider Monkey were long in this stock, a decline of 9% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully.
When looking at the hedgies followed by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the biggest position in Exxon Mobil Corporation (NYSE:XOM). Pzena Investment Management has a $454.3 million position in the stock, comprising 2.9% of its 13F portfolio. The second most bullish hedge fund manager is Donald Yacktman of Yacktman Asset Management, with a $438.2 million position; 2.9% of its 13F portfolio is allocated to the stock. Remaining investors that hold long positions include Ken Fisher’s Fisher Asset Management, Phill Gross and Robert Atchinson’s Adage Capital Management and D E Shaw.
Due to the fact that Exxon Mobil Corporation (NYSE:XOM) has faced falling interest from the aggregate hedge fund industry, it’s safe to say that there exists a select few hedgies that slashed their positions entirely last quarter. Interestingly, energy investor Andrew Hall’s Astenbeck Capital Management sold off the largest position of all the hedgies monitored by Insider Monkey, valued at an estimated $75.7 million in stock, and Jim Simons’ Renaissance Technologies was right behind this move, as the fund dumped about $51 million worth. These transactions are interesting, as total hedge fund interest fell by 6 funds last quarter.
Let’s now examine hedge fund activity in other stocks similar to Exxon Mobil Corporation (NYSE:XOM). These stocks are Wells Fargo & Co (NYSE:WFC), Johnson & Johnson (NYSE:JNJ), General Electric Company (NYSE:GE), and Facebook Inc (NASDAQ:FB). This group of stocks’ market valuations are closest to Exxon Mobil Corporation (NYSE:XOM)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WFC | 85 | 30864349 | -6 |
| JNJ | 74 | 3938813 | -4 |
| GE | 74 | 5951572 | 4 |
| FB | 128 | 8955439 | -5 |
As you can see these stocks had an average of 90.25 hedge funds with bullish positions and the average amount invested in these stocks was $12428 million. Facebook Inc (NASDAQ:FB) is the most popular stock in this table. On the other hand Johnson & Johnson (NYSE:JNJ) is the least popular one with only 74 bullish hedge fund positions. Compared to these stocks Exxon Mobil Corporation (NYSE:XOM) is even less popular than Johnson & Johnson (NYSE:JNJ). Considering that hedge funds aren’t fond of this stock, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. Our guess is that they aren’t too optimistic about a recovery in energy prices and there are several other more attractively priced smaller energy companies available at the moment. Although it is possible that hedge funds may think the stock is overpriced and some of them view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
