The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of ConocoPhillips (NYSE:COP).
Is ConocoPhillips (NYSE:COP) a buy here? Prominent investors are in a pessimistic mood. The number of long hedge fund bets went down by 8 in recent months. Our calculations also showed that COP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). COP was in 54 hedge funds’ portfolios at the end of March. There were 62 hedge funds in our database with COP positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 44 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We interview hedge fund managers and ask them about best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a peek at the recent hedge fund action regarding ConocoPhillips (NYSE:COP).
How have hedgies been trading ConocoPhillips (NYSE:COP)?
At the end of the first quarter, a total of 54 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards COP over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, D E Shaw was the largest shareholder of ConocoPhillips (NYSE:COP), with a stake worth $321.9 million reported as of the end of September. Trailing D E Shaw was Fisher Asset Management, which amassed a stake valued at $140.8 million. Adage Capital Management, Point72 Asset Management, and Yacktman Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Elm Ridge Capital allocated the biggest weight to ConocoPhillips (NYSE:COP), around 7.29% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, earmarking 5.88 percent of its 13F equity portfolio to COP.
Seeing as ConocoPhillips (NYSE:COP) has experienced declining sentiment from the smart money, logic holds that there exists a select few hedge funds who were dropping their positions entirely heading into Q4. Interestingly, Matt Smith’s Deep Basin Capital dropped the biggest stake of all the hedgies tracked by Insider Monkey, valued at close to $27.2 million in stock, and Sara Nainzadeh’s Centenus Global Management was right behind this move, as the fund cut about $15 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 8 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to ConocoPhillips (NYSE:COP). These stocks are Roper Technologies Inc. (NYSE:ROP), Sempra Energy (NYSE:SRE), Analog Devices, Inc. (NASDAQ:ADI), and Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG). All of these stocks’ market caps are similar to COP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ROP | 38 | 1015909 | -2 |
| SRE | 27 | 505194 | -8 |
| ADI | 45 | 1979695 | -6 |
| SMFG | 10 | 104520 | -1 |
| Average | 30 | 901330 | -4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $901 million. That figure was $962 million in COP’s case. Analog Devices, Inc. (NASDAQ:ADI) is the most popular stock in this table. On the other hand Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks ConocoPhillips (NYSE:COP) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on COP as the stock returned 41.9% so far in Q2 (through May 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
