Here Is What Hedge Funds Think About Royal Dutch Shell plc (ADR) (RDS)

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the government. The 13F filings show the funds’ and investors’ portfolio positions as of September 30. In this article, we look at what those funds think of Royal Dutch Shell plc (ADR) (NYSE:RDS) based on that data.

Royal Dutch Shell plc (ADR) investors should be aware of a decrease in hedge fund sentiment of late. At the end of this article we will also compare RDS to other stocks including Citigroup Inc. (NYSE:C), Chevron Corporation (NYSE:CVX), and The Home Depot, Inc. (NYSE:HD) to get a better sense of its popularity.

In the financial world there are several gauges investors employ to size up publicly traded companies. A pair of the most useful gauges are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the elite money managers can trounce their index-focused peers by a very impressive margin (see the details here).

Now, we’re going to take a glance at the fresh action encompassing Royal Dutch Shell plc (ADR) (NYSE:RDS).

How have hedgies been trading Royal Dutch Shell plc (ADR) (NYSE:RDS)?

Heading into Q4, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Pzena Investment Management, managed by Richard S. Pzena, holds the biggest position in Royal Dutch Shell plc (ADR) (NYSE:RDS). Pzena Investment Management has a $439.2 million position in the stock, comprising 2.8% of its 13F portfolio. The second most bullish fund manager is Alec Litowitz and Ross Laser of Magnetar Capital, with a $95 million position; 2.5% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions consist of Jim Simons’ Renaissance Technologies, Israel Englander’s Millennium Management and Russell Hawkins’ Hawkins Capital.

Due to the fact that Royal Dutch Shell plc (ADR) (NYSE:RDS) has witnessed declining sentiment from the smart money, we can see that there exists a select few hedge funds who sold off their full holdings by the end of the third quarter. Intriguingly, Ken Griffin’s Citadel Investment Group said goodbye to the biggest position of all the hedgies watched by Insider Monkey, valued at close to $19.4 million in stock, and Millennium Management Subsidiary’s Decade Capital Management was right behind this move, as the fund cut about $6.6 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 5 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks similar to Royal Dutch Shell plc (ADR) (NYSE:RDS). These stocks are Citigroup Inc. (NYSE:C), Chevron Corporation (NYSE:CVX), The Home Depot, Inc. (NYSE:HD), and HSBC Holdings plc (ADR) (NYSE:HSBC). This group of stocks’ market caps are closest to RDS’s market cap.

As you can see these stocks had an average of 62.5 hedge funds with bullish positions and the average amount invested in these stocks was $4132 million. That figure was $873 million in RDS’s case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand HSBC Holdings plc (ADR) (NYSE:HSBC) is the least popular one with only 15 bullish hedge fund positions. Royal Dutch Shell plc (ADR) (NYSE:RDS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard C might be a better candidate to consider a long position.