In this article we are going to use hedge fund sentiment as a tool and determine whether Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR) a buy here? Money managers were in a pessimistic mood. The number of bullish hedge fund bets dropped by 2 lately. Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR) was in 23 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that PBR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Howard Marks of Oaktree Capital
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. With all of this in mind we’re going to take a peek at the new hedge fund action regarding Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR).
Do Hedge Funds Think PBR Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PBR over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, GQG Partners was the largest shareholder of Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR), with a stake worth $1792.8 million reported as of the end of September. Trailing GQG Partners was Fisher Asset Management, which amassed a stake valued at $452.8 million. Arrowstreet Capital, Arrowstreet Capital, and Oaktree Capital Management 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 Contrarian Capital allocated the biggest weight to Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR), around 14.56% of its 13F portfolio. GQG Partners is also relatively very bullish on the stock, setting aside 4.91 percent of its 13F equity portfolio to PBR.
Due to the fact that Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR) has experienced a decline in interest from the aggregate hedge fund industry, we can see that there was a specific group of hedge funds that elected to cut their positions entirely last quarter. Interestingly, Renaissance Technologies said goodbye to the largest position of the “upper crust” of funds monitored by Insider Monkey, valued at an estimated $77 million in stock. Ken Griffin’s fund, Citadel Investment Group, also cut its stock, about $13.5 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR) but similarly valued. These stocks are CSX Corporation (NYSE:CSX), ABB Ltd (NYSE:ABB), BioNTech SE (NASDAQ:BNTX), Moody’s Corporation (NYSE:MCO), The Southern Company (NYSE:SO), ICICI Bank Limited (NYSE:IBN), and Illinois Tool Works Inc. (NYSE:ITW). This group of stocks’ market values are similar to PBR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CSX | 56 | 3915444 | 0 |
| ABB | 19 | 721684 | 4 |
| BNTX | 28 | 689029 | 8 |
| MCO | 58 | 15699733 | 14 |
| SO | 30 | 676309 | -7 |
| IBN | 28 | 2621460 | 0 |
| ITW | 39 | 422271 | -6 |
| Average | 36.9 | 3535133 | 1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.9 hedge funds with bullish positions and the average amount invested in these stocks was $3535 million. That figure was $3004 million in PBR’s case. Moody’s Corporation (NYSE:MCO) is the most popular stock in this table. On the other hand ABB Ltd (NYSE:ABB) is the least popular one with only 19 bullish hedge fund positions. Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PBR is 27.8. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. A small number of hedge funds were also right about betting on PBR as the stock returned 21.7% since the end of the third quarter (through 12/9) and outperformed the market by an even larger margin.
Follow Petroleo Brasileiro Sa Petrobras (NYSE:PBR)
Follow Petroleo Brasileiro Sa Petrobras (NYSE:PBR)
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Disclosure: None. This article was originally published at Insider Monkey.
