Will the new coronavirus cause a recession in US in the next 6 months? On February 27th, we put the probability at 75% and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Murphy Oil Corporation (NYSE:MUR).
Murphy Oil Corporation (NYSE:MUR) investors should be aware of an increase in hedge fund interest lately. Our calculations also showed that MUR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In today’s marketplace there are a multitude of signals investors use to grade publicly traded companies. A pair of the less utilized signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the elite investment managers can trounce the broader indices by a significant amount (see the details here).
Richard S. Pzena of Pzena Investment Management
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. 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. With all of this in mind let’s view the recent hedge fund action surrounding Murphy Oil Corporation (NYSE:MUR).
Hedge fund activity in Murphy Oil Corporation (NYSE:MUR)
At the end of the fourth quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MUR over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Pzena Investment Management was the largest shareholder of Murphy Oil Corporation (NYSE:MUR), with a stake worth $67.7 million reported as of the end of September. Trailing Pzena Investment Management was Citadel Investment Group, which amassed a stake valued at $32.2 million. Arrowstreet Capital, Two Sigma Advisors, and Arosa Capital 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 Arosa Capital Management allocated the biggest weight to Murphy Oil Corporation (NYSE:MUR), around 1.74% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, dishing out 0.32 percent of its 13F equity portfolio to MUR.
As industrywide interest jumped, key money managers have jumped into Murphy Oil Corporation (NYSE:MUR) headfirst. Arosa Capital Management, managed by Till Bechtolsheimer, initiated the most valuable position in Murphy Oil Corporation (NYSE:MUR). Arosa Capital Management had $8.4 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also made a $2.5 million investment in the stock during the quarter. The following funds were also among the new MUR investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Mike Vranos’s Ellington, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s check out hedge fund activity in other stocks similar to Murphy Oil Corporation (NYSE:MUR). These stocks are Parsons Corporation (NYSE:PSN), Univar Inc (NYSE:UNVR), Foot Locker, Inc. (NYSE:FL), and Penske Automotive Group, Inc. (NYSE:PAG). All of these stocks’ market caps are similar to MUR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PSN | 10 | 94767 | -3 |
| UNVR | 43 | 1536284 | 5 |
| FL | 29 | 426619 | -5 |
| PAG | 29 | 99761 | 12 |
| Average | 27.75 | 539358 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $539 million. That figure was $162 million in MUR’s case. Univar Inc (NYSE:UNVR) is the most popular stock in this table. On the other hand Parsons Corporation (NYSE:PSN) is the least popular one with only 10 bullish hedge fund positions. Murphy Oil Corporation (NYSE:MUR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately MUR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MUR investors were disappointed as the stock returned -76.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
