Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by nearly 10 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Concho Resources Inc. (NYSE:CXO). Currently there is only one ETF with at least 5% weight in CXO: VanEck Vectors Unconventional Oil & Gas ETF (NYSE:FRAK)
Concho Resources Inc. (NYSE:CXO) has experienced an increase in activity from the world’s largest hedge funds recently. CXO was in 28 hedge funds’ portfolios at the end of September. There were 27 hedge funds in our database with CXO positions at the end of the previous quarter. Our calculations also showed that CXO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most market participants, hedge funds are assumed to be worthless, old financial vehicles of the past. While there are over 8000 funds with their doors open today, We look at the top tier of this club, around 750 funds. It is estimated that this group of investors have their hands on most of all hedge funds’ total asset base, and by keeping track of their matchless picks, Insider Monkey has figured out several investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
David Harding of Winton Capital Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the new hedge fund action encompassing Concho Resources Inc. (NYSE:CXO).
What have hedge funds been doing with Concho Resources Inc. (NYSE:CXO)?
Heading into the fourth quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CXO over the last 17 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the number one position in Concho Resources Inc. (NYSE:CXO). Citadel Investment Group has a $143.8 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Israel Englander of Millennium Management, with a $38.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers that are bullish include Steve Cohen’s Point72 Asset Management, Anand Parekh’s Alyeska Investment Group and Jonathan Barrett and Paul Segal’s Luminus Management. In terms of the portfolio weights assigned to each position Game Creek Capital allocated the biggest weight to Concho Resources Inc. (NYSE:CXO), around 2.45% of its portfolio. SailingStone Capital Partners is also relatively very bullish on the stock, earmarking 2.38 percent of its 13F equity portfolio to CXO.
As one would reasonably expect, specific money managers have jumped into Concho Resources Inc. (NYSE:CXO) headfirst. Luminus Management, managed by Jonathan Barrett and Paul Segal, initiated the largest position in Concho Resources Inc. (NYSE:CXO). Luminus Management had $29.6 million invested in the company at the end of the quarter. Clint Carlson’s Carlson Capital also initiated a $28.7 million position during the quarter. The other funds with brand new CXO positions are David Harding’s Winton Capital Management, Sean Murphy’s Game Creek Capital, and George Soros’s Soros Fund Management.
Let’s now review hedge fund activity in other stocks similar to Concho Resources Inc. (NYSE:CXO). We will take a look at Enel Americas S.A. (NYSE:ENIA), Skyworks Solutions Inc (NASDAQ:SWKS), CenturyLink, Inc. (NYSE:CTL), and DexCom, Inc. (NASDAQ:DXCM). This group of stocks’ market valuations are closest to CXO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENIA | 8 | 180580 | -3 |
| SWKS | 24 | 690929 | -7 |
| CTL | 28 | 1097755 | 1 |
| DXCM | 33 | 558258 | 3 |
| Average | 23.25 | 631881 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $632 million. That figure was $388 million in CXO’s case. DexCom, Inc. (NASDAQ:DXCM) is the most popular stock in this table. On the other hand Enel Americas S.A. (NYSE:ENIA) is the least popular one with only 8 bullish hedge fund positions. Concho Resources Inc. (NYSE:CXO) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on CXO, though not to the same extent, as the stock returned 7% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
