PetroChina Company Limited (ADR) (PTR): Are Hedge Funds Right About This Stock?

The market has been volatile due to elections and the potential of another Federal Reserve rate increase. Small cap stocks have been on a tear, as the Russell 2000 ETF (IWM) has outperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of June. SEC filings and hedge fund investor letters indicate that the smart money seems to be getting back in stocks, and the funds’ movements is one of the reasons why small-cap stocks are red hot. In this article, we analyze what the smart money thinks of PetroChina Company Limited (ADR) (NYSE:PTR) and find out how it is affected by hedge funds’ moves.

PetroChina Company Limited (ADR) (NYSE:PTR) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 11 hedge funds’ portfolios at the end of the third quarter of 2016. At the end of this article we will also compare PTR to other stocks including Medtronic, Inc. (NYSE:MDT), British American Tobacco PLC (ADR) (NYSEAMEX:BTI), and TOTAL S.A. (ADR) (NYSE:TOT) to get a better sense of its popularity.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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Now, we’re going to take a look at the new action surrounding PetroChina Company Limited (ADR) (NYSE:PTR).

What have hedge funds been doing with PetroChina Company Limited (ADR) (NYSE:PTR)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2016. On the other hand, there were a total of 8 hedge funds with a bullish position in PTR at the beginning of this year. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world,, holds the biggest position in PetroChina Company Limited (ADR) (NYSE:PTR). Renaissance Technologies has a $14.8 million position in the stock, comprising less than 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Israel Englander’s Millennium Management, holding a $8.2 million position; less than 0.1% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish contain Cliff Asness’ AQR Capital Management, Ray Dalio’s Bridgewater Associates and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that Bridgewater Associates is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Since PetroChina Company Limited (ADR) (NYSE:PTR) has gone through a lull in interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedgies that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Michael Platt and William Reeves’s BlueCrest Capital Mgmt. got rid of the biggest stake of the 700 funds studied by Insider Monkey, totaling about $3.4 million in stock, and Matthew Tewksbury’s Stevens Capital Management was right behind this move, as the fund dumped about $0.3 million worth of shares.

Let’s now review hedge fund activity in other stocks similar to PetroChina Company Limited (ADR) (NYSE:PTR). These stocks are Medtronic, Inc. (NYSE:MDT), British American Tobacco PLC (ADR) (NYSEAMEX:BTI), TOTAL S.A. (ADR) (NYSE:TOT), and Mastercard Inc (NYSE:MA). All of these stocks’ market caps are closest to PTR’s market cap.

As you can see these stocks had an average of 40 hedge funds with bullish positions and the average amount invested in these stocks was $2371 million. That figure was $36 million in PTR’s case. Mastercard Inc (NYSE:MA) is the most popular stock in this table. On the other hand TOTAL S.A. (ADR) (NYSE:TOT) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks PetroChina Company Limited (ADR) (NYSE:PTR) is even less popular than TOT. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.