Verizon Communications Inc. (VZ), Noble Energy, Inc. (NBL) & More: Hedge Funds Are Glad They Sold Off These Stocks

Analyzing the moves of the world’s biggest hedge funds during the second quarter, we have identified and reported a number of significant changes. Now that the third quarter is edging to its end, we’ve taken a look at the stocks that were dumped by the most hedge funds and how they have fared since then. So let’s take a look and see if the smart money were right to dump these stocks.

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#5 Verizon

Verizon Communications Inc. (NYSE:VZ) has found itself out of favor with the hedge funds followed by Insider Monkey, as the number of funds invested in this stock dropped to 52 at the end of June from 61 a quarter before. Ray Dalio‘s Bridgewater Associates was among the funds that completely sold out of this stock, having dumped the 220,065 shares it held at the end of the first quarter. Billionaire Warren Buffett was undeterred by the developments at the company and Berkshire Hathaway continues to hold a little over 15 million shares of Verizon Communications Inc. (NYSE:VZ), a position worth $837 million at the end of June. Since the end of the second quarter, the stock has been on a slide, having fallen by 5.3% through Wednesday’s closing price of $52.06 per share. The largest wireless carrier in the United States, Verizon Communications Inc. (NYSE:VZ) sports a market cap of $214 billion and pays an annual dividend of $2.31 per share, providing shareholders with a 4.14% yield. The company has increased its dividend for nine consecutive years, a testimony to its commitment to return cash to investors. In order to counteract the slump in sales, Verizon has acquired AOL and is in the process to buy Yahoo!’s core internet businesses as it looks to tap into the mobile advertising market.

#4 Noble Energy

The hedge fund sentiment towards Noble Energy, Inc. (NYSE:NBL) also took a turn for the worse, with the number of long hedge fund positions having dropped to 36 at the end of June from 46 at the end of March. Jacob Gottlieb’s Visium Asset Management sold off the 194,348 shares it reportedly held at the end of the first quarter. Noble Energy, Inc. (NYSE:NBL) is the sponsor of Noble Midstream Partners LP (NYSE:NBLX), which recently went public on the New York Stock Exchange, racking up proceeds of approximately $281 million. Noble Energy plans to use Noble Midstream Partners on its plays in the Permian Basin in Texas and the Denver-Julesburg Basin in Colorado. Shares of Noble Energy, Inc. (NYSE:NBL) are up by around 10% for the year, although they have been trading in a range since the end of April. The company pays an annual dividend of $0.40 per share, which translates into a 1.21% yield. Analysts mostly recommend this stock as a ‘Buy’ with a consensus price target of $40.24 per share.

#3 Signet Jewelers

At the end of the second quarter, roughly 40% of Signet Jewelers Ltd. (NYSE:SIG) common stock was held by 44 of the funds in our database, down from 55 registered at the end of the first quarter. Dan Loeb changed his mind regarding Signet Jewelers Ltd. (NYSE:SIG), having only established a position for his fund, Third Point, during the first quarter. The fund dumped its entire holding, which had previously contained 1.0 million shares. Although at first it looked like Signet Jewelers was staging a rally, the stock plummeted at the end of August and is currently down by 9.5% since the end of the second quarter. The company’s second quarter financial report was the reason behind the fall. Signet Jewelers Ltd. (NYSE:SIG) posted adjusted earnings of $1.14 per share on $1.37 billion in revenue, while investors were expecting $1.45 billion in revenue and earnings of $1.47 per share. A number of analysts have subsequently downgraded the stock, citing a shift in the company’s fundamentals. JPMorgan reduced its rating to ‘Neutral’ from ‘Overweight’ and lowered the price target to $90 from $136, while Citigroup’s rating went from ‘Buy’ to ‘Neutral’, with a lower price target of $83 per share.

#2 Occidental Petroleum

At the end of June, Occidental Petroleum Corporation (NYSE:OXY) could be found in the portfolios of 38 of the funds tracked by Insider Monkey, down from 50 a quarter earlier. Although he did not completely unwind his fund’s position, billionaire Steve Cohen has significantly reduced exposure to Occidental Petroleum Corporation (NYSE:OXY), having dumped 60% of Point72 Asset Management’s position. According to its latest 13F filing, the fund holds just 220,000 shares worth $16.6 million at the end of June. Occidental Petroleum Corporation (NYSE:OXY) has a market cap of $55.6 billion and pays an annual dividend of $3.04 per share, providing shareholders with a 4.43% yield. Since the start of the third quarter, the stock has fallen by 3.9% through Wednesday’s closing price of $71.90 per share. During the 2016 second quarter, Occidental Petroleum swung to a loss, having reported a loss of $0.18 per share, in line with analysts’ expectations. Revenues fell 27% to $2.53 billion, missing analysts’ estiamate of $2.66 billion in revenue.

#1 McDonald’s

Over the course of the second quarter, the number of hedge funds holding a long position in McDonald’s Corporation (NYSE:MCD) decreased to 63 from 83 registered at the end of the first quarter. Having bought into the stock during the first quarter, Clint Carlson made a complete u-turn during the second quarter and sold off the 185,000 shares his fund had reported at the end of March. Billionaire Ken Griffin has also took steps to reduce exposure to McDonald’s Corporation (NYSE:MCD), as his fund, Citadel Advisors, cut its position by 82% to just 130,961 shares. Investors suffered a torrid ride during the third quarter, with the stock having shot up by 6.9% only to fall back down, currently trading down by 3% for the quarter. McDonald’s Corporation (NYSE:MCD)’s CEO, Steve Easterbrook, earlier this week has announced a 6% increase in the company’s quarterly dividend to $0.94 per share. Given the current price of the stock, the annual dividend of $3.76 per share would provide investors with a 3.2% yield. Analysts are not very bullish on this stock and recommend it mainly as a ‘Hold’ with an average price target of $126.13, which indicated an upside potential of 9.5%.

Disclosure: none.