We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Whiting Petroleum Corp (NYSE:WLL), and what that likely means for the prospects of the company and its stock.
Whiting Petroleum Corp (NYSE:WLL) investors should be aware of a decrease in activity from the world’s largest hedge funds of late. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Generac Holdings Inc. (NYSE:GNRC), PBF Energy Inc (NYSE:PBF), and Select Income REIT (NYSE:SIR) to gather more data points.
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With all of this in mind, let’s take a peek at the recent action surrounding Whiting Petroleum Corp (NYSE:WLL).
Hedge fund activity in Whiting Petroleum Corp (NYSE:WLL)
At the end of the third quarter, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Fine Capital Partners, managed by Debra Fine, holds the most valuable position in Whiting Petroleum Corp (NYSE:WLL). Fine Capital Partners has a $120.3 million position in the stock, comprising 12.3% of its 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $90 million position; 0.2% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions comprise Doug Silverman and Alexander Klabin’s Senator Investment Group, Ken Griffin’s Citadel Investment Group and David Costen Haley’s HBK Investments.
Since Whiting Petroleum Corp (NYSE:WLL) has faced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there were a few hedge funds that elected to cut their full holdings heading into Q4. Interestingly, Dan Loeb’s Third Point dumped the biggest position of all the hedgies monitored by Insider Monkey, totaling close to $75.9 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund sold off about $25.8 million worth. These transactions are interesting, as total hedge fund interest fell by 6 funds heading into Q4.
Let’s check out hedge fund activity in other stocks similar to Whiting Petroleum Corp (NYSE:WLL). We will take a look at Generac Holdings Inc. (NYSE:GNRC), PBF Energy Inc (NYSE:PBF), Select Income REIT (NYSE:SIR), and Yelp Inc (NYSE:YELP). This group of stocks’ market valuations are similar to WLL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GNRC | 16 | 159459 | 3 |
| PBF | 23 | 497804 | -1 |
| SIR | 12 | 80113 | -2 |
| YELP | 40 | 1087703 | -5 |
As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $456 million. That figure was $636 million in WLL’s case. Yelp Inc (NYSE:YELP) is the most popular stock in this table. On the other hand Select Income REIT (NYSE:SIR) is the least popular one with only 12 bullish hedge fund positions. Whiting Petroleum Corp (NYSE:WLL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard YELP might be a better candidate to consider a long position.
