After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 28. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Diamondback Energy Inc (NASDAQ:FANG).
Hedge fund interest in Diamondback Energy Inc (NASDAQ:FANG) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare FANG to other stocks including Copart, Inc. (NASDAQ:CPRT), Fortis Inc. (NYSE:FTS), and The Kroger Co. (NYSE:KR) to get a better sense of its popularity. Our calculations also showed that FANG isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are plenty of formulas stock traders employ to grade their stock investments. A duo of the most underrated formulas are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat their index-focused peers by a very impressive amount (see the details here).
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s analyze the new hedge fund action regarding Diamondback Energy Inc (NASDAQ:FANG).
What does smart money think about Diamondback Energy Inc (NASDAQ:FANG)?
At the end of the second quarter, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FANG over the last 16 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable 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 Corvex Capital, which reported holding $319.9 million worth of stock at the end of March. It was followed by Millennium Management with a $250.8 million position. Other investors bullish on the company included Citadel Investment Group, Point72 Asset Management, and Balyasny Asset Management.
Because Diamondback Energy Inc (NASDAQ:FANG) has witnessed falling interest from hedge fund managers, logic holds that there exists a select few hedgies who were dropping their entire stakes in the second quarter. Intriguingly, Carl Icahn’s Icahn Capital LP said goodbye to the biggest position of the “upper crust” of funds watched by Insider Monkey, valued at about $526.7 million in stock. Andreas Halvorsen’s fund, Viking Global, also dumped its stock, about $115.5 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Diamondback Energy Inc (NASDAQ:FANG) but similarly valued. These stocks are Copart, Inc. (NASDAQ:CPRT), Fortis Inc. (NYSE:FTS), The Kroger Co. (NYSE:KR), and Keysight Technologies Inc (NYSE:KEYS). This group of stocks’ market valuations resemble FANG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CPRT | 30 | 252281 | 6 |
| FTS | 12 | 256125 | -1 |
| KR | 28 | 404426 | 6 |
| KEYS | 39 | 855014 | 2 |
| Average | 27.25 | 441962 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $442 million. That figure was $1532 million in FANG’s case. Keysight Technologies Inc (NYSE:KEYS) is the most popular stock in this table. On the other hand Fortis Inc. (NYSE:FTS) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Diamondback Energy Inc (NASDAQ:FANG) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately FANG wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on FANG were disappointed as the stock returned -17.3% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
