The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings discloses the funds’ positions on June 30. We at Insider Monkey have made an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Royal Dutch Shell plc (ADR) (NYSE:RDS) based on those filings.
The number of hedge fund shareholders of Royal Dutch Shell plc (ADR) (NYSE:RDS) from among those tracked by Insider Monkey’s database rose to a 52-week high as of the midpoint of 2018. 39 hedge funds were long the stock at that time, 27% higher than a year earlier. RDS shares already boast a 6% dividend yield, which ranked them in the top 10 among the 25 Dividend Stocks that Billionaire Ken Fisher is Bullish On, but could be in line for another raise soon, along with the oil major’s commitment to buy back $25 billion worth of shares by the end of 2020.
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 flagship best performing hedge funds strategy returned 17.4% year to date and outperformed the market by more than 14 percentage points this year. This strategy also outperformed the market by 3 percentage points in the fourth quarter despite the market volatility (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
How have hedgies been trading Royal Dutch Shell plc (ADR) (NYSE:RDS)?
At the end of the third quarter, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a lift of 8% from the previous quarter. By comparison, just 30 hedge funds held shares or bullish call options in RDS in the middle of 2017. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the most valuable position in Royal Dutch Shell plc (ADR) (NYSE:RDS), worth close to $490.6 million, accounting for 1.2% of its total 13F portfolio. The second-largest stake is held by Pzena Investment Management, managed by Richard S. Pzena, which holds a $415.8 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish encompass Nigel Greig and Kenneth Cowin’s Pittencrieff Partners – Gabalex Capital, Till Bechtolsheimer’s Arosa Capital Management and Ernest Chow and Jonathan Howe’s Sensato Capital Management.
With general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Samlyn Capital, managed by Robert Pohly, created the largest call position in Royal Dutch Shell plc (ADR) (NYSE:RDS). Samlyn Capital had $69.8 million invested in the company at the end of the quarter. Guy Shahar’s DSAM Partners also initiated a $2.9 million position during the quarter. The other funds with brand new RDS positions are Michael Platt and William Reeves’ BlueCrest Capital Mgmt., Clint Carlson’s Carlson Capital, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Royal Dutch Shell plc (ADR) (NYSE:RDS) but similarly valued. We will take a look at Visa Inc (NYSE:V), Bank of America Corp (NYSE:BAC), Wells Fargo & Co (NYSE:WFC), and Wal-Mart Stores, Inc. (NYSE:WMT). All of these stocks’ market caps match RDS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| V | 109 | 13035656 | -7 |
| BAC | 109 | 26566975 | -11 |
| WFC | 73 | 32183999 | -2 |
| WMT | 52 | 4399105 | 4 |
As you can see these stocks had an average of 86 hedge funds with bullish positions and the average amount invested in these stocks was $19.05 billion. That figure was $2.33 billion in RDS’s case. Visa Inc (NYSE:V) is the most popular stock in this table. On the other hand Wal-Mart Stores, Inc. (NYSE:WMT) is the least popular one with only 52 bullish hedge fund positions. Compared to these stocks Royal Dutch Shell plc (ADR) (NYSE:RDS) is even less popular than WMT. 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.
Disclosure: None. This article was originally published at Insider Monkey.
