Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Concho Resources Inc. (NYSE:CXO) based on that data and determine whether they were really smart about the stock.
Concho Resources Inc. (NYSE:CXO) was in 44 hedge funds’ portfolios at the end of June. The all time high for this statistics is 45. CXO has seen an increase in support from the world’s most elite money managers lately. There were 31 hedge funds in our database with CXO positions at the end of the first quarter. Our calculations also showed that CXO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are numerous gauges shareholders use to evaluate publicly traded companies. A pair of the less utilized gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can trounce the market by a very impressive margin (see the details here).
Ken Griffin of Citadel Investment Group
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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 precious metals prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to go over the latest hedge fund action regarding Concho Resources Inc. (NYSE:CXO).
Hedge fund activity in Concho Resources Inc. (NYSE:CXO)
Heading into the third quarter of 2020, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 42% from one quarter earlier. By comparison, 27 hedge funds held shares or bullish call options in CXO a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in Concho Resources Inc. (NYSE:CXO) was held by Millennium Management, which reported holding $155.1 million worth of stock at the end of September. It was followed by D E Shaw with a $138.9 million position. Other investors bullish on the company included Point72 Asset Management, Citadel Investment Group, and Adage Capital Management. In terms of the portfolio weights assigned to each position Covalis Capital allocated the biggest weight to Concho Resources Inc. (NYSE:CXO), around 6.28% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, earmarking 5.27 percent of its 13F equity portfolio to CXO.
As one would reasonably expect, key hedge funds were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, assembled the biggest position in Concho Resources Inc. (NYSE:CXO). Point72 Asset Management had $114.6 million invested in the company at the end of the quarter. Todd J. Kantor’s Encompass Capital Advisors also initiated a $35 million position during the quarter. The other funds with brand new CXO positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Zilvinas Mecelis’s Covalis Capital, and John Osterweis’s Osterweis Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Concho Resources Inc. (NYSE:CXO) but similarly valued. We will take a look at Lyft, Inc. (NASDAQ:LYFT), Zendesk Inc (NYSE:ZEN), Bio-Techne Corporation (NASDAQ:TECH), United Airlines Holdings Inc (NASDAQ:UAL), Erie Indemnity Company (NASDAQ:ERIE), Medical Properties Trust, Inc. (NYSE:MPW), and Advance Auto Parts, Inc. (NYSE:AAP). All of these stocks’ market caps are similar to CXO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LYFT | 30 | 324369 | -1 |
| ZEN | 63 | 1579039 | 8 |
| TECH | 27 | 278924 | 1 |
| UAL | 38 | 917094 | -3 |
| ERIE | 14 | 42805 | -3 |
| MPW | 17 | 162185 | 1 |
| AAP | 47 | 1507053 | 9 |
| Average | 33.7 | 687353 | 1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.7 hedge funds with bullish positions and the average amount invested in these stocks was $687 million. That figure was $964 million in CXO’s case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand Erie Indemnity Company (NASDAQ:ERIE) is the least popular one with only 14 bullish hedge fund positions. Concho Resources Inc. (NYSE:CXO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CXO is 69.9. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately CXO wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CXO were disappointed as the stock returned 1.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
