Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Helmerich & Payne, Inc. (NYSE:HP).
Helmerich & Payne, Inc. (NYSE:HP) has actually seen an increase in enthusiasm from smart money in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Antero Resources Corp (NYSE:AR), Comerica Incorporated (NYSE:CMA), and Splunk Inc (NASDAQ:SPLK) to gather more data points.
Follow Helmerich & Payne Inc. (NYSE:HP)
Follow Helmerich & Payne Inc. (NYSE:HP)
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.
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Now, we’re going to take a peek at the recent action surrounding Helmerich & Payne, Inc. (NYSE:HP).
What does the smart money think about Helmerich & Payne, Inc. (NYSE:HP)?
At Q3’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, up 4% from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, holds the most valuable position in Helmerich & Payne, Inc. (NYSE:HP). According to regulatory filings, the fund has a $49.5 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $40.1 million position; 0.3% of its 13F portfolio is allocated to the company. Other peers with similar optimism contain Cliff Asness’s AQR Capital Management, Till Bechtolsheimer’s Arosa Capital Management and Ken Fisher’s Fisher Asset Management.
As one would reasonably expect, key hedge funds have jumped into Helmerich & Payne, Inc. (NYSE:HP) headfirst. Citadel Investment Group, managed by Ken Griffin, assembled the most outsized call position in Helmerich & Payne, Inc. (NYSE:HP). According to its latest 13F filing, the fund had $13.5 million invested in the company at the end of the quarter. Ed Beddow and William Tichy’s Beddow Capital Management also initiated a $8.2 million position during the quarter. The other funds with brand new HP positions are Israel Englander’s Millennium Management, and David Keidan’s Buckingham Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Helmerich & Payne, Inc. (NYSE:HP) but similarly valued. We will take a look at Antero Resources Corp (NYSE:AR), Comerica Incorporated (NYSE:CMA), Splunk Inc (NASDAQ:SPLK), and Alaska Air Group, Inc. (NYSE:ALK). All of these stocks’ market caps resemble HP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AR | 40 | 1577120 | -11 |
| CMA | 41 | 851631 | -1 |
| SPLK | 32 | 595827 | 0 |
| ALK | 36 | 997368 | -6 |
As you can see these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was a little over $1 billion. That figure was a modest $287 million in HP’s case. Comerica Incorporated (NYSE:CMA) is the most popular stock in this table. On the other hand Splunk Inc (NASDAQ:SPLK) is the least popular one with only 32 bullish hedge fund positions. Compared to these stocks Helmerich & Payne, Inc. (NYSE:HP) is even less popular than SPLK. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: none.
