Is Exxon Mobil (XOM) Stock A Buy or Sell?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Exxon Mobil Corporation (NYSE:XOM)? The smart money sentiment can provide an answer to this question.

Is Exxon Mobil (XOM) stock a buy or sell? The smart money was getting more optimistic. The number of long hedge fund bets improved by 11 lately. Exxon Mobil Corporation (NYSE:XOM) was in 63 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 68. Our calculations also showed that XOM isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Phillip Gross of Adage Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). Now let’s take a gander at the key hedge fund action encompassing Exxon Mobil Corporation (NYSE:XOM).

Do Hedge Funds Think XOM Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 63 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the previous quarter. On the other hand, there were a total of 63 hedge funds with a bullish position in XOM a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Adage Capital Management held the most valuable stake in Exxon Mobil Corporation (NYSE:XOM), which was worth $529 million at the end of the fourth quarter. On the second spot was Fisher Asset Management which amassed $320.6 million worth of shares. Citadel Investment Group, D E Shaw, and Millennium 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 Engine No. 1 LLC allocated the biggest weight to Exxon Mobil Corporation (NYSE:XOM), around 16.31% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, dishing out 3.83 percent of its 13F equity portfolio to XOM.

There weren’t any hedge funds initiating brand new positions in the stock during the fourth quarter.

Let’s go over hedge fund activity in other stocks similar to Exxon Mobil Corporation (NYSE:XOM). These stocks are Accenture Plc (NYSE:ACN), QUALCOMM, Incorporated (NASDAQ:QCOM), T-Mobile US, Inc. (NYSE:TMUS), Costco Wholesale Corporation (NASDAQ:COST), BHP Group (NYSE:BHP), Novo Nordisk A/S (NYSE:NVO), and Chevron Corporation (NYSE:CVX). This group of stocks’ market values are similar to XOM’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 56 hedge funds with bullish positions and the average amount invested in these stocks was $3892 million. That figure was $2209 million in XOM’s case. T-Mobile US, Inc. (NYSE:TMUS) is the most popular stock in this table. On the other hand BHP Group (NYSE:BHP) is the least popular one with only 20 bullish hedge fund positions. Exxon Mobil Corporation (NYSE:XOM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for XOM is 63.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on XOM as the stock returned 39.4% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.