Hedge Funds Are Betting On Hess Corporation (HES)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Hess Corporation (NYSE:HES).

Is Hess Corporation (NYSE:HES) the right investment to pursue these days? Investors who are in the know were betting on the stock. The number of long hedge fund positions rose by 5 in recent months. Hess Corporation (NYSE:HES) was in 31 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 41. Our calculations also showed that HES isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Joel Greenblatt of Gotham Asset Management

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. Keeping this in mind let’s analyze the recent hedge fund action regarding Hess Corporation (NYSE:HES).

Do Hedge Funds Think HES Is A Good Stock To Buy Now?

At the end of June, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the previous quarter. On the other hand, there were a total of 28 hedge funds with a bullish position in HES a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

The largest stake in Hess Corporation (NYSE:HES) was held by Fisher Asset Management, which reported holding $308.3 million worth of stock at the end of June. It was followed by Adage Capital Management with a $95.8 million position. Other investors bullish on the company included Citadel Investment Group, Citadel Investment Group, and Impala Asset Management. In terms of the portfolio weights assigned to each position Game Creek Capital allocated the biggest weight to Hess Corporation (NYSE:HES), around 3.37% of its 13F portfolio. Levin Capital Strategies is also relatively very bullish on the stock, earmarking 2.02 percent of its 13F equity portfolio to HES.

As one would reasonably expect, some big names were breaking ground themselves. PEAK6 Capital Management, managed by Matthew Hulsizer, established the most outsized call position in Hess Corporation (NYSE:HES). PEAK6 Capital Management had $16 million invested in the company at the end of the quarter. Joe DiMenna’s ZWEIG DIMENNA PARTNERS also initiated a $7.9 million position during the quarter. The other funds with new positions in the stock are Joel Greenblatt’s Gotham Asset Management, D. E. Shaw’s D E Shaw, and Till Bechtolsheimer’s Arosa Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to Hess Corporation (NYSE:HES). These stocks are Tyson Foods, Inc. (NYSE:TSN), Fifth Third Bancorp (NASDAQ:FITB), Alexandria Real Estate Equities Inc (NYSE:ARE), Rogers Communications Inc. (NYSE:RCI), Sirius XM Holdings Inc (NASDAQ:SIRI), Genmab A/S (NASDAQ:GMAB), and Ball Corporation (NYSE:BLL). All of these stocks’ market caps are closest to HES’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.3 hedge funds with bullish positions and the average amount invested in these stocks was $616 million. That figure was $616 million in HES’s case. Ball Corporation (NYSE:BLL) is the most popular stock in this table. On the other hand Genmab A/S (NASDAQ:GMAB) is the least popular one with only 9 bullish hedge fund positions. Hess Corporation (NYSE:HES) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HES is 64.1. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on HES as the stock returned 3.6% since the end of Q2 (through 10/15) 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.