Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Pioneer Natural Resources Company (NYSE:PXD).
Pioneer Natural Resources Company (NYSE:PXD) has experienced an increase in activity from the world’s largest hedge funds lately. Pioneer Natural Resources Company (NYSE:PXD) was in 48 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 74. There were 45 hedge funds in our database with PXD holdings at the end of June. Our calculations also showed that PXD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now let’s take a look at the latest hedge fund action regarding Pioneer Natural Resources Company (NYSE:PXD).
Phillip Gross of Adage Capital
Do Hedge Funds Think PXD Is A Good Stock To Buy Now?
At the end of September, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PXD over the last 25 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Adage Capital Management was the largest shareholder of Pioneer Natural Resources Company (NYSE:PXD), with a stake worth $262.4 million reported as of the end of September. Trailing Adage Capital Management was Citadel Investment Group, which amassed a stake valued at $148.7 million. Holocene Advisors, Citadel Investment Group, and Marshall Wace LLP 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 Value Holdings LP allocated the biggest weight to Pioneer Natural Resources Company (NYSE:PXD), around 3.74% of its 13F portfolio. Key Square Capital Management is also relatively very bullish on the stock, dishing out 3.24 percent of its 13F equity portfolio to PXD.
As industrywide interest jumped, key money managers were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, created the most outsized position in Pioneer Natural Resources Company (NYSE:PXD). Point72 Asset Management had $26.7 million invested in the company at the end of the quarter. James Woodson Davis’s Woodson Capital Management also initiated a $25.3 million position during the quarter. The following funds were also among the new PXD investors: Todd J. Kantor’s Encompass Capital Advisors, Dmitry Balyasny’s Balyasny Asset Management, and Ken Heebner’s Capital Growth Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Pioneer Natural Resources Company (NYSE:PXD) but similarly valued. We will take a look at American Electric Power Company, Inc. (NASDAQ:AEP), Prudential Financial Inc (NYSE:PRU), Koninklijke Philips NV (NYSE:PHG), Paychex, Inc. (NASDAQ:PAYX), Electronic Arts Inc. (NASDAQ:EA), Constellation Brands, Inc. (NYSE:STZ), and Sempra (NYSE:SRE). This group of stocks’ market caps resemble PXD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AEP | 36 | 751595 | 7 |
| PRU | 33 | 460021 | 5 |
| PHG | 11 | 79466 | 1 |
| PAYX | 34 | 1115089 | 5 |
| EA | 53 | 1097032 | -3 |
| STZ | 53 | 1719109 | 3 |
| SRE | 23 | 287269 | -5 |
| Average | 34.7 | 787083 | 1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.7 hedge funds with bullish positions and the average amount invested in these stocks was $787 million. That figure was $959 million in PXD’s case. Electronic Arts Inc. (NASDAQ:EA) is the most popular stock in this table. On the other hand Koninklijke Philips NV (NYSE:PHG) is the least popular one with only 11 bullish hedge fund positions. Pioneer Natural Resources Company (NYSE:PXD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PXD is 71.5. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on PXD as the stock returned 8.9% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Pioneer Natural Resources Co (NYSE:PXD)
Follow Pioneer Natural Resources Co (NYSE:PXD)
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Disclosure: None. This article was originally published at Insider Monkey.
