Is PSX Stock A Buy or Sell?

The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Phillips 66 (NYSE:PSX).

Is PSX stock a buy? Hedge funds were turning less bullish. The number of bullish hedge fund bets were trimmed by 1 recently. Phillips 66 (NYSE:PSX) was in 26 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 47. Our calculations also showed that PSX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 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 recent hedge fund action surrounding Phillips 66 (NYSE:PSX).

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

At Q4’s end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PSX over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Steven Richman’s East Side Capital (RR Partners) has the largest position in Phillips 66 (NYSE:PSX), worth close to $46.7 million, comprising 6.9% of its total 13F portfolio. Sitting at the No. 2 spot is Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $32.8 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism consist of Dmitry Balyasny’s Balyasny Asset Management, Suzi Nutton (CEO)’s Lansdowne Partners and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position East Side Capital (RR Partners) allocated the biggest weight to Phillips 66 (NYSE:PSX), around 6.88% of its 13F portfolio. Hi-Line Capital Management is also relatively very bullish on the stock, earmarking 2.67 percent of its 13F equity portfolio to PSX.

Due to the fact that Phillips 66 (NYSE:PSX) has faced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedgies who were dropping their full holdings last quarter. At the top of the heap, John Overdeck and David Siegel’s Two Sigma Advisors sold off the largest investment of all the hedgies monitored by Insider Monkey, valued at close to $22.1 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also dropped its stock, about $7.6 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Phillips 66 (NYSE:PSX) but similarly valued. These stocks are XPeng Inc. (NYSE:XPEV), Ball Corporation (NYSE:BLL), Schlumberger Limited. (NYSE:SLB), Copart, Inc. (NASDAQ:CPRT), Datadog, Inc. (NASDAQ:DDOG), Chunghwa Telecom Co., Ltd (NYSE:CHT), and PACCAR Inc (NASDAQ:PCAR). This group of stocks’ market caps are closest to PSX’s market cap.

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As you can see these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $1086 million. That figure was $192 million in PSX’s case. Datadog, Inc. (NASDAQ:DDOG) is the most popular stock in this table. On the other hand Chunghwa Telecom Co., Ltd (NYSE:CHT) is the least popular one with only 5 bullish hedge fund positions. Phillips 66 (NYSE:PSX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PSX is 42.9. 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 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on PSX as the stock returned 12.7% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.

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