Is Hess Corp. (HES) A Good Stock To Buy?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore, imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Hess Corp. (NYSE:HES).

Hess Corp. (NYSE:HES) shareholders have witnessed a decrease in activity from the world’s largest hedge funds recently. Hess Corp. (NYSE:HES) was in 41 hedge funds’ portfolios at the end of the third quarter of 2015. There were 43 hedge funds in our database with Hess Corp. (NYSE:HES) holdings at the end of the previous quarter. 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 Mead Johnson Nutrition CO (NYSE:MJN), Tenaris S.A. (ADR) (NYSE:TS), and W.W. Grainger, Inc. (NYSE:GWW) to gather more data points.

In the eyes of most stock holders, hedge funds are perceived as slow, old investment vehicles of years past. While there are greater than 8000 funds with their doors open today, we hone in on the top tier of this club, about 700 funds. These investment experts direct most of all hedge funds’ total asset base, and by paying attention to their highest performing picks, Insider Monkey has figured out numerous investment strategies that have historically outperformed the broader indices. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Now, let’s take a peek at the fresh action regarding Hess Corp. (NYSE:HES).

What does the smart money think about Hess Corp. (NYSE:HES)?

At the end of the previous quarter, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 5% from the last quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Paul Singer’s Elliott Management has the most valuable position in Hess Corp. (NYSE:HES), worth close to $891.1 million, comprising 17.1% of its total 13F portfolio. Sitting at the No. 2 spot is Fir Tree, which holds a $145.3 million position; 2.4% of its 13F portfolio is allocated to the company. Some other peers that are bullish consist of Ken Griffin’s Citadel Investment Group, Phill Gross and Robert Atchinson’s Adage Capital Management and Robert Polak’s Anchor Bolt Capital.

Due to the fact that Hess Corp. (NYSE:HES) has faced a falling interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedgies who were dropping their positions entirely in the third quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management dropped the biggest stake of all the hedgies followed by Insider Monkey, comprising an estimated $113.2 million in stock, and Anand Parekh’s Alyeska Investment Group was right behind this move, as the fund dumped about $24.4 million worth of shares. These transactions are important to note, as total hedge fund interest dropped by 2 funds in the third quarter.

Let’s go over hedge fund activity in other stocks similar to Hess Corp. (NYSE:HES). We will take a look at Mead Johnson Nutrition CO (NYSE:MJN), Tenaris S.A. (ADR) (NYSE:TS), W.W. Grainger, Inc. (NYSE:GWW), and Motorola Solutions Inc (NYSE:MSI). This group of stocks’ market valuations matches Hess Corp. (NYSE:HES)’s market valuation.

As you can see, these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $1.40 billion. That figure was $1.58 billion in Hess Corp. (NYSE:HES)’s case. Mead Johnson Nutrition CO (NYSE:MJN) is the most popular stock in this table. On the other hand, Tenaris S.A. (ADR) (NYSE:TS) is the least popular one with only 13 bullish hedge fund positions. Hess Corp. (NYSE:HES) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Mead Johnson Nutrition CO (NYSE:MJN) might be a better candidate to consider a long position.