We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Hess Corporation (NYSE:HES).
Hess Corporation (NYSE:HES) has experienced an increase in hedge fund sentiment lately. HES was in 37 hedge funds’ portfolios at the end of the third quarter of 2018. There were 32 hedge funds in our database with HES holdings at the end of the previous quarter. Our calculations also showed that HES isn’t among the 30 most popular stocks among hedge funds.
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 take a gander at the key hedge fund action encompassing Hess Corporation (NYSE:HES).
What have hedge funds been doing with Hess Corporation (NYSE:HES)?
At the end of the third quarter, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HES over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Hess Corporation (NYSE:HES) was held by Elliott Management, which reported holding $1570.8 million worth of stock at the end of September. It was followed by Impala Asset Management with a $183.4 million position. Other investors bullish on the company included Levin Capital Strategies, Millennium Management, and Anchor Bolt Capital.
Now, some big names were leading the bulls’ herd. Alyeska Investment Group, managed by Anand Parekh, created the most outsized position in Hess Corporation (NYSE:HES). Alyeska Investment Group had $36.8 million invested in the company at the end of the quarter. Guy Shahar’s DSAM Partners also initiated a $4.3 million position during the quarter. The other funds with brand new HES positions are Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, Matthew Hulsizer’s PEAK6 Capital Management, and Ian Cumming and Joseph Steinberg’s Leucadia National.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Hess Corporation (NYSE:HES) but similarly valued. We will take a look at The Hershey Company (NYSE:HSY), IHS Markit Ltd. (NASDAQ:INFO), Cerner Corporation (NASDAQ:CERN), and Cintas Corporation (NASDAQ:CTAS). This group of stocks’ market values are closest to HES’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HSY | 29 | 448888 | 4 |
| INFO | 31 | 1334993 | 4 |
| CERN | 25 | 889948 | 3 |
| CTAS | 31 | 784446 | -3 |
| Average | 29 | 864569 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $865 million. That figure was $2.37 billion in HES’s case. IHS Markit Ltd. (NASDAQ:INFO) is the most popular stock in this table. On the other hand Cerner Corporation (NASDAQ:CERN) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Hess Corporation (NYSE:HES) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
