It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 20 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated an outperformance of 6 percentage points during the first 5 months of 2019. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Chevron Corporation (NYSE:CVX).
Is Chevron Corporation (NYSE:CVX) worth your attention right now? The smart money is in a bullish mood. The number of long hedge fund positions moved up by 5 lately. Our calculations also showed that cvx isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a peek at the new hedge fund action surrounding Chevron Corporation (NYSE:CVX).
Hedge fund activity in Chevron Corporation (NYSE:CVX)
At Q1’s end, a total of 53 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CVX over the last 15 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Fisher Asset Management held the most valuable stake in Chevron Corporation (NYSE:CVX), which was worth $517.4 million at the end of the first quarter. On the second spot was Two Sigma Advisors which amassed $337.1 million worth of shares. Moreover, Adage Capital Management, Renaissance Technologies, and Millennium Management were also bullish on Chevron Corporation (NYSE:CVX), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, some big names have jumped into Chevron Corporation (NYSE:CVX) headfirst. Renaissance Technologies, managed by Jim Simons, initiated the most valuable position in Chevron Corporation (NYSE:CVX). Renaissance Technologies had $225.5 million invested in the company at the end of the quarter. Till Bechtolsheimer’s Arosa Capital Management also made a $17.2 million investment in the stock during the quarter. The other funds with brand new CVX positions are Matthew Tewksbury’s Stevens Capital Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s now review hedge fund activity in other stocks similar to Chevron Corporation (NYSE:CVX). These stocks are AT&T Inc. (NYSE:T), Novartis AG (NYSE:NVS), Wells Fargo & Company (NYSE:WFC), and The Home Depot, Inc. (NYSE:HD). This group of stocks’ market values are closest to CVX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| T | 41 | 1083936 | -15 |
| NVS | 33 | 1984333 | -1 |
| WFC | 73 | 25750715 | -4 |
| HD | 58 | 3544213 | 0 |
| Average | 51.25 | 8090799 | -5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 51.25 hedge funds with bullish positions and the average amount invested in these stocks was $8091 million. That figure was $2167 million in CVX’s case. Wells Fargo & Company (NYSE:WFC) is the most popular stock in this table. On the other hand Novartis AG (NYSE:NVS) is the least popular one with only 33 bullish hedge fund positions. Chevron Corporation (NYSE:CVX) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately CVX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CVX were disappointed as the stock returned -5.4% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
