We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 835 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2019. In this article we are going to take a look at smart money sentiment towards TOTAL S.A. (NYSE:TOT).
TOTAL S.A. (NYSE:TOT) shareholders have witnessed a decrease in hedge fund sentiment recently. Our calculations also showed that TOT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Phill Gross of Adage Capital Management
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the fresh hedge fund action surrounding TOTAL S.A. (NYSE:TOT).
What does smart money think about TOTAL S.A. (NYSE:TOT)?
At Q4’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the third quarter of 2019. On the other hand, there were a total of 9 hedge funds with a bullish position in TOT a year ago. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in TOTAL S.A. (NYSE:TOT). Fisher Asset Management has a $1.0951 billion position in the stock, comprising 1.1% of its 13F portfolio. On Fisher Asset Management’s heels is Alyeska Investment Group, led by Anand Parekh, holding a $41.2 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Other peers with similar optimism encompass Steve Cohen’s Point72 Asset Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Paul Marshall and Ian Wace’s Marshall Wace LLP. In terms of the portfolio weights assigned to each position Invenomic Capital Management allocated the biggest weight to TOTAL S.A. (NYSE:TOT), around 1.3% of its 13F portfolio. Diametric Capital is also relatively very bullish on the stock, setting aside 1.29 percent of its 13F equity portfolio to TOT.
Since TOTAL S.A. (NYSE:TOT) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there is a sect of funds that slashed their entire stakes heading into Q4. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dropped the largest stake of the 750 funds followed by Insider Monkey, comprising close to $12.8 million in stock. Brandon Haley’s fund, Holocene Advisors, also dumped its stock, about $2.5 million worth. These moves are interesting, as aggregate hedge fund interest fell by 1 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to TOTAL S.A. (NYSE:TOT). We will take a look at Netflix, Inc. (NASDAQ:NFLX), BHP Group (NYSE:BHP), Novo Nordisk A/S (NYSE:NVO), and Accenture Plc (NYSE:ACN). This group of stocks’ market values match TOT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NFLX | 114 | 13080883 | 11 |
| BHP | 20 | 886421 | -4 |
| NVO | 23 | 2935902 | 2 |
| ACN | 41 | 1208829 | -4 |
| Average | 49.5 | 4528009 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 49.5 hedge funds with bullish positions and the average amount invested in these stocks was $4528 million. That figure was $1196 million in TOT’s case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand BHP Group (NYSE:BHP) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks TOTAL S.A. (NYSE:TOT) is even less popular than BHP. Hedge funds dodged a bullet by taking a bearish stance towards TOT. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but managed to beat the market by 12.9 percentage points. Unfortunately TOT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); TOT investors were disappointed as the stock returned -37.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
