Is Anadarko Petroleum Corporation (APC) Going to Burn These Hedge Funds?

Does Anadarko Petroleum Corporation (NYSE:APC) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund sentiment towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years. Going back to the primary subject of this article, the future faith of Anadarko Petroleum is highly-dependent upon the future of crude oil prices. Oil prices jumped to three-month highs earlier this week, as the freshly-sealed agreement among the world’s largest oil producers to freeze output and fresh data about hedge funds’ mounting bullish bets on oil prices have driven crude prices up. With that in mind, let’s take a look at the hedge fund sentiment towards Anadarko Petroleum in the final quarter of 2015.

Is Anadarko Petroleum Corporation (NYSE:APC) a buy here? Hedge funds are selling. The number of bullish hedge fund positions dropped by 9 in recent months. At the end of this article we will also compare APC to other stocks including Telecom Italia S.p.A. (ADR) (NYSE:TI), Banco Bradesco SA (ADR) (NYSE:BBD), and Sherwin-Williams Company (NYSE:SHW) to get a better sense of its popularity.

Today there are a lot of metrics shareholders can use to size up publicly traded companies. A pair of the most underrated metrics are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the best fund managers can outperform the broader indices by a superb amount (see the details here).

Anadarko Petroleum Corporation (NYSE:APC) is one of the world’s largest independent exploration and production companies, whose asset portfolio comprises U.S. onshore resource plays in the Rocky Mountains, the Appalachian basin, and Alaska. The company also has operations in the deepwater Gulf of Mexico, as well as exploration and production activities worldwide (e.g. Algeria, Ghana, and Colombia, to name just a few). The global supply/demand crude oil imbalance put its mark on Anadarko Petroleum’s financial performance throughout 2015, as the company’s 2015 sales revenues declined to $9.49 billion from $16.38 billion in 2014. The E&P company anticipates capital expenditures in the range of $2.6 billion to $2.8 billion during 2016, which denotes a decrease of more than 50% from capital investments made in 2015. Nonetheless, the company anticipates that its capital expenditures will be fully funded by cash flows from operations and asset monetization efforts. Just recently, analysts at Macquarie ranked Anadarko Petroleum as its Top Pick in the U.S. exploration and production segment, citing “defensive posture on the outlook for commodity”, asset monetization efforts, among other things. Macquarie has an ‘Outperform’ rating on the stock and a price target of $60. More importantly, analysts have an average 12-month price target of $55.50 on the stock, which yields an upside of 23%.

Now, let’s take a look at the new action encompassing Anadarko Petroleum Corporation (NYSE:APC), as well as discuss the financial health of the company.