Is HES 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 Hess Corporation (NYSE:HES)? The smart money sentiment can provide an answer to this question.

Is HES stock a buy or sell? Money managers were becoming less confident. The number of bullish hedge fund positions retreated by 2 lately. Hess Corporation (NYSE:HES) was in 33 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 41. Our calculations also showed that HES isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 35 hedge funds in our database with HES holdings at the end of September.

John Levin of Levin Capital Strategies

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. Now we’re going to take a look at the latest hedge fund action regarding Hess Corporation (NYSE:HES).

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

Heading into the first quarter of 2021, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the third quarter of 2020. By comparison, 34 hedge funds held shares or bullish call options in HES a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Fisher’s Fisher Asset Management has the most valuable position in Hess Corporation (NYSE:HES), worth close to $164.5 million, comprising 0.1% of its total 13F portfolio. The second most bullish fund manager is Holocene Advisors, led by Brandon Haley, holding a $27.3 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions contain Ben Jacobs’s Anomaly Capital Management, John A. Levin’s Levin Capital Strategies and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Anomaly Capital Management allocated the biggest weight to Hess Corporation (NYSE:HES), around 3.21% of its 13F portfolio. Game Creek Capital is also relatively very bullish on the stock, earmarking 2.36 percent of its 13F equity portfolio to HES.

Seeing as Hess Corporation (NYSE:HES) has witnessed declining sentiment from hedge fund managers, we can see that there was a specific group of money managers that elected to cut their entire stakes in the fourth quarter. Intriguingly, Bruce Kovner’s Caxton Associates LP dropped the biggest stake of the “upper crust” of funds followed by Insider Monkey, worth about $41.5 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dumped about $16.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds in the fourth quarter.

Let’s now review hedge fund activity in other stocks similar to Hess Corporation (NYSE:HES). These stocks are Ulta Beauty, Inc. (NASDAQ:ULTA), Steris Plc (NYSE:STE), Horizon Therapeutics Public Limited Company (NASDAQ:HZNP), Occidental Petroleum Corporation (NYSE:OXY), Expeditors International of Washington, Inc. (NASDAQ:EXPD), PerkinElmer, Inc. (NYSE:PKI), and Quest Diagnostics Incorporated (NYSE:DGX). This group of stocks’ market caps are closest to HES’s market cap.

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As you can see these stocks had an average of 40.6 hedge funds with bullish positions and the average amount invested in these stocks was $1580 million. That figure was $366 million in HES’s case. Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) is the most popular stock in this table. On the other hand Expeditors International of Washington, Inc. (NASDAQ:EXPD) is the least popular one with only 25 bullish hedge fund positions. Hess Corporation (NYSE:HES) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HES is 40.5. 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 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. A small number of hedge funds were also right about betting on HES as the stock returned 41.6% since the end of the fourth quarter (through 4/1) and outperformed the market by an even larger margin.

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