The fourth quarter was a rough one for most investors, as fears of a rising interest rate environment in the U.S, a trade war with China, and a more or less stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Helmerich & Payne, Inc. (NYSE:HP), and what that likely means for the prospects of the company and its stock.
Is Helmerich & Payne, Inc. (NYSE:HP) a buy right now? The best stock pickers are getting more bullish. The number of bullish hedge fund positions increased by 7 in recent months. Our calculations also showed that HP isn’t among the 30 most popular stocks among hedge funds. HP was in 33 hedge funds’ portfolios at the end of the third quarter of 2018. There were 26 hedge funds in our database with HP positions at the end of the previous quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to go over the fresh hedge fund action encompassing Helmerich & Payne, Inc. (NYSE:HP).
What have hedge funds been doing with Helmerich & Payne, Inc. (NYSE:HP)?
Heading into the fourth quarter of 2018, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the previous quarter. By comparison, 23 hedge funds held shares or bullish call options in HP heading into this year. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Helmerich & Payne, Inc. (NYSE:HP), which was worth $86 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $58.6 million worth of shares. Moreover, Royce & Associates, Fairfax Financial Holdings, and Arosa Capital Management were also bullish on Helmerich & Payne, Inc. (NYSE:HP), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key money managers have been driving this bullishness. SIR Capital Management, managed by Vince Maddi and Shawn Brennan, established the largest position in Helmerich & Payne, Inc. (NYSE:HP). SIR Capital Management had $10.1 million invested in the company at the end of the quarter. Jeffrey Talpins’s Element Capital Management also initiated a $5.6 million position during the quarter. The other funds with new positions in the stock are Sara Nainzadeh’s Centenus Global Management, Joel Greenblatt’s Gotham Asset Management, and Ian Cumming and Joseph Steinberg’s Leucadia National.
Let’s now review hedge fund activity in other stocks similar to Helmerich & Payne, Inc. (NYSE:HP). These stocks are Fortune Brands Home & Security Inc (NYSE:FBHS), Ingredion Inc (NYSE:INGR), The Madison Square Garden Company (NASDAQ:MSG), and EPAM Systems Inc (NYSE:EPAM). This group of stocks’ market values match HP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FBHS | 33 | 597687 | -4 |
| INGR | 21 | 338525 | -1 |
| MSG | 40 | 1773567 | -2 |
| EPAM | 21 | 165154 | -1 |
| Average | 28.75 | 718733 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $719 million. That figure was $370 million in HP’s case. The Madison Square Garden Company (NASDAQ:MSG) is the most popular stock in this table. On the other hand Ingredion Inc (NYSE:INGR) is the least popular one with only 21 bullish hedge fund positions. Helmerich & Payne, Inc. (NYSE:HP) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MSG might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
