Hedge Funds Have Never Been This Bullish On Matador Resources Co (MTDR)

In this article we will analyze whether Matador Resources Co (NYSE:MTDR) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Matador Resources Co (NYSE:MTDR) was in 27 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 23. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. MTDR has seen an increase in hedge fund sentiment of late. There were 18 hedge funds in our database with MTDR positions at the end of the second quarter. Our calculations also showed that MTDR 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. With all of this in mind we’re going to take a look at the latest hedge fund action surrounding Matador Resources Co (NYSE:MTDR).

Richard Driehaus of Driehaus Capital

Do Hedge Funds Think MTDR Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in MTDR a year ago. 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 stakes considerably (or already accumulated large positions).

More specifically, D E Shaw was the largest shareholder of Matador Resources Co (NYSE:MTDR), with a stake worth $72.2 million reported as of the end of September. Trailing D E Shaw was Arrowstreet Capital, which amassed a stake valued at $60.8 million. Millennium Management, Driehaus Capital, and Renaissance Technologies 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 Value Holdings LP allocated the biggest weight to Matador Resources Co (NYSE:MTDR), around 5.11% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, earmarking 3.2 percent of its 13F equity portfolio to MTDR.

Consequently, some big names have jumped into Matador Resources Co (NYSE:MTDR) headfirst. Renaissance Technologies, created the largest position in Matador Resources Co (NYSE:MTDR). Renaissance Technologies had $26.9 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $4.6 million position during the quarter. The following funds were also among the new MTDR investors: Dmitry Balyasny’s Balyasny Asset Management, Matthew Hulsizer’s PEAK6 Capital Management, and Ken Griffin’s Citadel Investment Group.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Matador Resources Co (NYSE:MTDR) but similarly valued. We will take a look at Ryder System, Inc. (NYSE:R), Olo Inc. (NYSE:OLO), Clearwater Analytics Holdings Inc. (NYSE:CWAN), TeleTech Holdings, Inc. (NASDAQ:TTEC), Equitrans Midstream Corporation (NYSE:ETRN), SeaWorld Entertainment Inc (NYSE:SEAS), and Envestnet Inc (NYSE:ENV). This group of stocks’ market values are closest to MTDR’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $490 million. That figure was $364 million in MTDR’s case. SeaWorld Entertainment Inc (NYSE:SEAS) is the most popular stock in this table. On the other hand Envestnet Inc (NYSE:ENV) is the least popular one with only 12 bullish hedge fund positions. Matador Resources Co (NYSE:MTDR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MTDR is 68.8. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 beat the market again by 5.1 percentage points. Unfortunately MTDR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MTDR were disappointed as the stock returned 6.4% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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