Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Chesapeake Energy Corporation (NYSE:CHK) from the perspective of those elite funds.
Chesapeake Energy Corporation was in 34 hedge funds’ portfolios at the end of the third quarter of 2015. CHK investors should pay attention to an increase in hedge fund sentiment lately. There were 33 hedge funds in our database with CHK holdings at the end of the previous quarter. At the end of this article we will also compare CHK to other stocks including RenaissanceRe Holdings Ltd. (NYSE:RNR), National Retail Properties, Inc. (NYSE:NNN), and People’s United Financial, Inc. (NASDAQ:PBCT) to get a better sense of its popularity.
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Now, let’s take a look at the key action surrounding Chesapeake Energy Corporation (NYSE:CHK).
What does the smart money think about Chesapeake Energy Corporation (NYSE:CHK)?
Heading into Q4, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the second quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Carl Icahn’s Icahn Capital LP has the most valuable position in Chesapeake Energy Corporation (NYSE:CHK), worth close to $535.5 million, comprising 1.9% of its total 13F portfolio. The second most bullish fund manager is Southeastern Asset Management, managed by Mason Hawkins, which holds a $424.4 million position; 3.6% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions include Robert Pitts’s Steadfast Capital Management, and Christian Leone’s Luxor Capital Group.
Now, specific money managers have been driving this bullishness. Steadfast Capital Management, managed by Robert Pitts, assembled the most outsized position in Chesapeake Energy Corporation (NYSE:CHK). Steadfast Capital Management had $67.7 million invested in the company at the end of the quarter. Christian Leone’s Luxor Capital Group also initiated a $26.3 million position during the quarter. The other funds with brand new CHK positions are Andreas Halvorsen’s Viking Global, Malcolm Fairbairn’s Ascend Capital, and Robert Vollero and Gentry T. Beach’s Vollero Beach Capital Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Chesapeake Energy Corporation (NYSE:CHK) but similarly valued. These stocks are RenaissanceRe Holdings Ltd. (NYSE:RNR), National Retail Properties, Inc. (NYSE:NNN), People’s United Financial, Inc. (NASDAQ:PBCT), and Live Nation Entertainment, Inc. (NYSE:LYV). This group of stocks’ market caps are similar to CHK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RNR | 19 | 344999 | -7 |
| NNN | 16 | 197330 | -1 |
| PBCT | 10 | 55674 | -2 |
| LYV | 28 | 577396 | -8 |
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $294 million. That figure was $1211 million in CHK’s case. Live Nation Entertainment, Inc. (NYSE:LYV) is the most popular stock in this table. On the other hand People’s United Financial, Inc. (NASDAQ:PBCT) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Chesapeake Energy Corporation (NYSE:CHK) 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.
