At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Is CNOOC Ltd (ADR) (NYSE:CEO) a buy right now? The best stock pickers are actually becoming less hopeful. The number of long hedge fund bets that are revealed through the 13F filings were trimmed by 3 lately. CEO was in 9 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with CEO holdings at the end of the previous quarter. At the end of this article we will also compare CEO to other stocks including First Cash Financial Services, Inc. (NASDAQ:FCFS), Lakeland Financial Corporation (NASDAQ:LKFN), and Shenandoah Telecommunications Company (NASDAQ:SHEN) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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With all of this in mind, we’re going to review the latest action encompassing CNOOC Ltd (ADR) (NYSE:CEO).
Hedge fund activity in CNOOC Ltd (ADR) (NYSE:CEO)
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 25% from the second quarter of 2016. By comparison, 8 hedge funds held shares or bullish call options in CEO heading into this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the most valuable position in CNOOC Ltd (ADR) (NYSE:CEO), worth close to $49.4 million. Sitting at the No. 2 spot is Renaissance Technologies, one of the largest hedge funds in the world, holding a $22.3 million position. Other professional money managers with similar optimism encompass Howard Marks’ Oaktree Capital Management, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners. We should note that none of these hedge funds are 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.
Seeing as CNOOC Ltd (ADR) (NYSE:CEO) has gone through declining sentiment from the smart money, it’s safe to say that there exists a select few fund managers that decided to sell off their full holdings heading into Q4. Interestingly, Michael Platt and William Reeves’ BlueCrest Capital Mgmt. dropped the largest stake of all the hedgies followed by Insider Monkey, totaling about $177.9 million in stock. David Kowitz and Sheldon Kasowitz’s fund, Indus Capital, also said goodbye to its stock, about $11.2 million worth of shares.
Let’s check out hedge fund activity in other stocks similar to CNOOC Ltd (ADR) (NYSE:CEO). We will take a look at First Cash Financial Services, Inc. (NASDAQ:FCFS), Lakeland Financial Corporation (NASDAQ:LKFN), Shenandoah Telecommunications Company (NASDAQ:SHEN), and Petrobras Argentina SA ADR (NYSE:PZE). This group of stocks’ market values are similar to CEO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FCFS | 14 | 145967 | 5 |
| LKFN | 8 | 7818 | 2 |
| SHEN | 11 | 45982 | 3 |
| PZE | 8 | 10710 | -1 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $100 million in CEO’s case. First Cash Financial Services, Inc. (NASDAQ:FCFS) is the most popular stock in this table. On the other hand Lakeland Financial Corporation (NASDAQ:LKFN) is the least popular one with only 8 bullish hedge fund positions. CNOOC Ltd (ADR) (NYSE:CEO) 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. In this regard FCFS might be a better candidate to consider taking a long position in.
Disclosure: None
