Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Occidental Petroleum Corporation (NYSE:OXY) in this article.
Is Occidental (OXY) stock a buy or sell? Investors who are in the know were in an optimistic mood. The number of long hedge fund positions went up by 6 recently. Occidental Petroleum Corporation (NYSE:OXY) was in 49 hedge funds’ portfolios at the end of December. The all time high for this statistic is 62. Our calculations also showed that OXY isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla 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). With all of this in mind we’re going to review the recent hedge fund action regarding Occidental Petroleum Corporation (NYSE:OXY).
Do Hedge Funds Think OXY Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in OXY over the last 22 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Icahn Capital LP, managed by Carl Icahn, holds the number one position in Occidental Petroleum Corporation (NYSE:OXY). Icahn Capital LP has a $1.5341 billion position in the stock, comprising 7.6% of its 13F portfolio. The second most bullish fund manager is David Tepper of Appaloosa Management LP, with a $140.2 million position; 2.1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions comprise Carl Icahn’s Icahn Capital LP, D. E. Shaw’s D E Shaw and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Icahn Capital LP allocated the biggest weight to Occidental Petroleum Corporation (NYSE:OXY), around 7.65% of its 13F portfolio. MFN Partners is also relatively very bullish on the stock, setting aside 3.42 percent of its 13F equity portfolio to OXY.
Now, key money managers were leading the bulls’ herd. Appaloosa Management LP, managed by David Tepper, initiated the most outsized position in Occidental Petroleum Corporation (NYSE:OXY). Appaloosa Management LP had $140.2 million invested in the company at the end of the quarter. Renaissance Technologies also made a $34.4 million investment in the stock during the quarter. The other funds with brand new OXY positions are John Paulson’s Paulson & Co, Brandon Haley’s Holocene Advisors, and Ben Jacobs’s Anomaly Capital Management.
Let’s now review hedge fund activity in other stocks similar to Occidental Petroleum Corporation (NYSE:OXY). We will take a look at Expeditors International of Washington (NASDAQ:EXPD), PerkinElmer, Inc. (NYSE:PKI), Quest Diagnostics Incorporated (NYSE:DGX), Nucor Corporation (NYSE:NUE), KeyCorp (NYSE:KEY), Citrix Systems, Inc. (NASDAQ:CTXS), and Seagate Technology plc (NASDAQ:STX). This group of stocks’ market valuations resemble OXY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EXPD | 25 | 477813 | -6 |
| PKI | 31 | 1978722 | -5 |
| DGX | 45 | 531778 | 3 |
| NUE | 29 | 138612 | 1 |
| KEY | 29 | 317740 | -4 |
| CTXS | 29 | 352466 | -2 |
| STX | 30 | 2167418 | 7 |
| Average | 31.1 | 852078 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.1 hedge funds with bullish positions and the average amount invested in these stocks was $852 million. That figure was $2151 million in OXY’s case. Quest Diagnostics Incorporated (NYSE:DGX) is the most popular stock in this table. On the other hand Expeditors International of Washington (NASDAQ:EXPD) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Occidental Petroleum Corporation (NYSE:OXY) is more popular among hedge funds. Our overall hedge fund sentiment score for OXY is 83.7. 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 returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on OXY as the stock returned 62.3% since the end of December (through 3/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Occidental Petroleum Corp (NYSE:OXY)
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Disclosure: None. This article was originally published at Insider Monkey.
