Hedge Funds Have Never Been Less Bullish On YPF Sociedad Anonima (YPF)

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards YPF Sociedad Anonima (NYSE:YPF) at the end of the first quarter and determine whether the smart money was really smart about this stock.

YPF Sociedad Anonima (NYSE:YPF) was in 13 hedge funds’ portfolios at the end of the first quarter of 2020. YPF has seen a decrease in activity from the world’s largest hedge funds of late. There were 15 hedge funds in our database with YPF positions at the end of the previous quarter. Our calculations also showed that YPF isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

According to most shareholders, hedge funds are viewed as unimportant, old investment vehicles of the past. While there are greater than 8000 funds with their doors open at the moment, Our experts hone in on the masters of this club, around 850 funds. These money managers preside over the majority of the smart money’s total asset base, and by keeping an eye on their best equity investments, Insider Monkey has determined many investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Joshua Friedman of Canyon Capital Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s check out the key hedge fund action surrounding YPF Sociedad Anonima (NYSE:YPF).

How have hedgies been trading YPF Sociedad Anonima (NYSE:YPF)?

At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards YPF over the last 18 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

The largest stake in YPF Sociedad Anonima (NYSE:YPF) was held by Saba Capital, which reported holding $9 million worth of stock at the end of September. It was followed by Canyon Capital Advisors with a $6.7 million position. Other investors bullish on the company included Redwood Capital Management, Citadel Investment Group, and NWI Management. In terms of the portfolio weights assigned to each position Redwood Capital Management allocated the biggest weight to YPF Sociedad Anonima (NYSE:YPF), around 0.67% of its 13F portfolio. Saba Capital is also relatively very bullish on the stock, setting aside 0.47 percent of its 13F equity portfolio to YPF.

Because YPF Sociedad Anonima (NYSE:YPF) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there were a few funds that elected to cut their full holdings last quarter. It’s worth mentioning that Howard Marks’s Oaktree Capital Management sold off the largest stake of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $15.7 million in stock. Leonard A. Potter’s fund, Wildcat Capital Management, also sold off its stock, about $2.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 2 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to YPF Sociedad Anonima (NYSE:YPF). We will take a look at Navistar International Corp (NYSE:NAV), Belden Inc. (NYSE:BDC), Evertec Inc (NYSE:EVTC), and Capitol Federal Financial, Inc. (NASDAQ:CFFN). All of these stocks’ market caps are closest to YPF’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $280 million. That figure was $25 million in YPF’s case. Navistar International Corp (NYSE:NAV) is the most popular stock in this table. On the other hand Capitol Federal Financial, Inc. (NASDAQ:CFFN) is the least popular one with only 11 bullish hedge fund positions. YPF Sociedad Anonima (NYSE:YPF) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on YPF as the stock returned 38.4% during the second quarter and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.