We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article, we look at what those funds think of Diamondback Energy Inc (NASDAQ:FANG) based on that data.
Is Diamondback Energy Inc (NASDAQ:FANG) undervalued? Hedge funds were becoming hopeful. The number of bullish hedge fund bets advanced by 3 recently. Diamondback Energy Inc (NASDAQ:FANG) was in 38 hedge funds’ portfolios at the end of June. The all time high for this statistic is 47. Our calculations also showed that FANG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 35 hedge funds in our database with FANG positions at the end of the first quarter.
In the eyes of most shareholders, hedge funds are viewed as unimportant, old financial tools of years past. While there are greater than 8000 funds in operation at present, Our experts choose to focus on the leaders of this group, approximately 850 funds. These hedge fund managers manage the lion’s share of the hedge fund industry’s total capital, and by observing their inimitable stock picks, Insider Monkey has spotted a few investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Bill Miller of Miller Value Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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 we’re going to go over the fresh hedge fund action surrounding Diamondback Energy Inc (NASDAQ:FANG).
Do Hedge Funds Think FANG Is A Good Stock To Buy Now?
At second quarter’s end, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FANG over the last 24 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
The largest stake in Diamondback Energy Inc (NASDAQ:FANG) was held by Miller Value Partners, which reported holding $119.8 million worth of stock at the end of June. It was followed by Citadel Investment Group with a $71.1 million position. Other investors bullish on the company included Citadel Investment Group, Holocene Advisors, and GLG Partners. In terms of the portfolio weights assigned to each position Miller Value Partners allocated the biggest weight to Diamondback Energy Inc (NASDAQ:FANG), around 2.85% of its 13F portfolio. Hill City Capital is also relatively very bullish on the stock, designating 2.83 percent of its 13F equity portfolio to FANG.
As one would reasonably expect, key hedge funds have been driving this bullishness. Capital Growth Management, managed by Ken Heebner, created the biggest position in Diamondback Energy Inc (NASDAQ:FANG). Capital Growth Management had $22.5 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $17.4 million position during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson’s Adage Capital Management, Michael Gelband’s ExodusPoint Capital, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Diamondback Energy Inc (NASDAQ:FANG). We will take a look at United Airlines Holdings Inc (NASDAQ:UAL), Rollins, Inc. (NYSE:ROL), Zai Lab Limited (NASDAQ:ZLAB), Nuance Communications Inc. (NASDAQ:NUAN), IDEX Corporation (NYSE:IEX), Entegris Inc (NASDAQ:ENTG), and VICI Properties Inc. (NYSE:VICI). All of these stocks’ market caps are similar to FANG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UAL | 39 | 704030 | 1 |
| ROL | 30 | 610715 | 0 |
| ZLAB | 36 | 1029464 | 4 |
| NUAN | 72 | 5576065 | 15 |
| IEX | 22 | 945302 | 3 |
| ENTG | 25 | 1389606 | 2 |
| VICI | 37 | 664684 | -4 |
| Average | 37.3 | 1559981 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $1560 million. That figure was $443 million in FANG’s case. Nuance Communications Inc. (NASDAQ:NUAN) is the most popular stock in this table. On the other hand IDEX Corporation (NYSE:IEX) is the least popular one with only 22 bullish hedge fund positions. Diamondback Energy Inc (NASDAQ:FANG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FANG is 48.3. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Hedge funds were also right about betting on FANG as the stock returned 18.6% since the end of Q2 (through 10/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Diamondback Energy Inc. (NASDAQ:FANG)
Follow Diamondback Energy Inc. (NASDAQ:FANG)
Suggested Articles:
- 33 Most Famous Harvard Students of All Time
- 10 Best Home Appliance Stocks to Buy
- 15 Largest Spice Companies in the World
Disclosure: None. This article was originally published at Insider Monkey.
