As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Diamondback Energy Inc (NASDAQ:FANG).
Diamondback Energy Inc (NASDAQ:FANG) investors should be aware of an increase in enthusiasm from smart money of late. Diamondback Energy Inc (NASDAQ:FANG) was in 51 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 47. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 38 hedge funds in our database with FANG holdings at the end of June. Our calculations also showed that FANG 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 we’re going to view the latest hedge fund action regarding Diamondback Energy Inc (NASDAQ:FANG).
Scott Bessent of Key Square Capital Management
Do Hedge Funds Think FANG Is A Good Stock To Buy Now?
At Q3’s end, a total of 51 of the hedge funds tracked by Insider Monkey were long this stock, a change of 34% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FANG over the last 25 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
More specifically, Holocene Advisors was the largest shareholder of Diamondback Energy Inc (NASDAQ:FANG), with a stake worth $134 million reported as of the end of September. Trailing Holocene Advisors was Millennium Management, which amassed a stake valued at $95.4 million. Miller Value Partners, Citadel Investment Group, and Citadel Investment Group 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 Key Square Capital Management allocated the biggest weight to Diamondback Energy Inc (NASDAQ:FANG), around 6.32% of its 13F portfolio. Hill City Capital is also relatively very bullish on the stock, designating 3.81 percent of its 13F equity portfolio to FANG.
Consequently, key hedge funds were breaking ground themselves. Woodson Capital Management, managed by James Woodson Davis, created the most valuable position in Diamondback Energy Inc (NASDAQ:FANG). Woodson Capital Management had $26.6 million invested in the company at the end of the quarter. Vince Maddi and Shawn Brennan’s SIR Capital Management also made a $23.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Scott Bessent’s Key Square Capital Management, Renaissance Technologies, and David Harding’s Winton Capital Management.
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. We will take a look at NVR, Inc. (NYSE:NVR), Bentley Systems, Incorporated (NASDAQ:BSY), Entegris Inc (NASDAQ:ENTG), Akamai Technologies, Inc. (NASDAQ:AKAM), PagSeguro Digital Ltd. (NYSE:PAGS), Continental Resources, Inc. (NYSE:CLR), and Wheaton Precious Metals Corp. (NYSE:WPM). All of these stocks’ market caps are similar to FANG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NVR | 32 | 480486 | 4 |
| BSY | 18 | 141737 | 1 |
| ENTG | 26 | 1505122 | 1 |
| AKAM | 30 | 327872 | 0 |
| PAGS | 41 | 2446922 | 1 |
| CLR | 24 | 166253 | 1 |
| WPM | 27 | 347520 | 1 |
| Average | 28.3 | 773702 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.3 hedge funds with bullish positions and the average amount invested in these stocks was $774 million. That figure was $802 million in FANG’s case. PagSeguro Digital Ltd. (NYSE:PAGS) is the most popular stock in this table. On the other hand Bentley Systems, Incorporated (NASDAQ:BSY) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Diamondback Energy Inc (NASDAQ:FANG) is more popular among hedge funds. Our overall hedge fund sentiment score for FANG is 90. 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 returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on FANG as the stock returned 13.2% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Diamondback Energy Inc. (NASDAQ:FANG)
Follow Diamondback Energy Inc. (NASDAQ:FANG)
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Disclosure: None. This article was originally published at Insider Monkey.
