Here is What Hedge Funds Think About Hess Corporation (HES)

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 Hess Corporation (NYSE:HES).

Is Hess Corporation (NYSE:HES) a worthy investment now? Money managers were getting less bullish. The number of bullish hedge fund bets dropped by 4 recently. Hess Corporation (NYSE:HES) was in 27 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 41. Our calculations also showed that HES 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. Keeping this in mind let’s take a look at the latest hedge fund action encompassing Hess Corporation (NYSE:HES).

Ken Fisher of Fisher Asset Management

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

At the end of September, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. By comparison, 35 hedge funds held shares or bullish call options in HES a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Fisher Asset Management held the most valuable stake in Hess Corporation (NYSE:HES), which was worth $293.4 million at the end of the third quarter. On the second spot was Adage Capital Management which amassed $168.6 million worth of shares. Alyeska Investment Group, Impala Asset Management, 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 Game Creek Capital allocated the biggest weight to Hess Corporation (NYSE:HES), around 3.81% of its 13F portfolio. Impala Asset Management is also relatively very bullish on the stock, designating 2.69 percent of its 13F equity portfolio to HES.

Judging by the fact that Hess Corporation (NYSE:HES) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of hedge funds that slashed their positions entirely last quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dumped the largest position of the 750 funds followed by Insider Monkey, worth an estimated $14.1 million in stock. Till Bechtolsheimer’s fund, Arosa Capital Management, also dumped its stock, about $7 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 4 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Hess Corporation (NYSE:HES) but similarly valued. These stocks are Devon Energy Corporation (NYSE:DVN), ZoomInfo Technologies Inc. (NASDAQ:ZI), Caesars Entertainment Inc. (NASDAQ:CZR), Credit Suisse Group AG (NYSE:CS), Rogers Communications Inc. (NYSE:RCI), Splunk Inc (NASDAQ:SPLK), and Tractor Supply Company (NASDAQ:TSCO). This group of stocks’ market valuations are similar to HES’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 39.1 hedge funds with bullish positions and the average amount invested in these stocks was $1165 million. That figure was $727 million in HES’s case. Caesars Entertainment Inc. (NASDAQ:CZR) is the most popular stock in this table. On the other hand Credit Suisse Group AG (NYSE:CS) is the least popular one with only 8 bullish hedge fund positions. Hess Corporation (NYSE:HES) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HES is 37.7. 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 negative signal and 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 surpassed the market again by 5.1 percentage points. Unfortunately HES wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); HES investors were disappointed as the stock returned 0.8% 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 most of these stocks already outperformed the market in 2021.

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