Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Antero Resources Corp (NYSE:AR) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is Antero Resources Corp (NYSE:AR) the right pick for your portfolio? The best stock pickers were getting more optimistic. The number of bullish hedge fund bets rose by 8 lately. Antero Resources Corp (NYSE:AR) was in 41 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 51. Our calculations also showed that AR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 33 hedge funds in our database with AR positions at the end of the second quarter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to check out the new hedge fund action encompassing Antero Resources Corp (NYSE:AR).
Phillip Gross of Adage Capital
Do Hedge Funds Think AR Is A Good Stock To Buy Now?
At third quarter’s end, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from one quarter earlier. By comparison, 21 hedge funds held shares or bullish call options in AR a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, SailingStone Capital Partners was the largest shareholder of Antero Resources Corp (NYSE:AR), with a stake worth $115 million reported as of the end of September. Trailing SailingStone Capital Partners was Graham Capital Management, which amassed a stake valued at $104.8 million. FPR Partners, Shah Capital Management, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position SailingStone Capital Partners allocated the biggest weight to Antero Resources Corp (NYSE:AR), around 29.08% of its 13F portfolio. Shah Capital Management is also relatively very bullish on the stock, dishing out 27.99 percent of its 13F equity portfolio to AR.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Encompass Capital Advisors, managed by Todd J. Kantor, assembled the largest position in Antero Resources Corp (NYSE:AR). Encompass Capital Advisors had $67.5 million invested in the company at the end of the quarter. Kenneth Mario Garschina’s Mason Capital Management also made a $25.9 million investment in the stock during the quarter. The following funds were also among the new AR investors: Phill Gross and Robert Atchinson’s Adage Capital Management, Ken Grossman and Glen Schneider’s SG Capital Management, and Mike Masters’s Masters Capital Management.
Let’s now review hedge fund activity in other stocks similar to Antero Resources Corp (NYSE:AR). These stocks are Exponent, Inc. (NASDAQ:EXPO), DCP Midstream LP (NYSE:DCP), Quidel Corporation (NASDAQ:QDEL), Manpowergroup Inc (NYSE:MAN), Autohome Inc (NYSE:ATHM), Sonoco Products Company (NYSE:SON), and Vicor Corp (NASDAQ:VICR). This group of stocks’ market caps resemble AR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EXPO | 21 | 126075 | 1 |
| DCP | 4 | 18162 | 1 |
| QDEL | 22 | 252628 | 3 |
| MAN | 26 | 316244 | -1 |
| ATHM | 11 | 173382 | -5 |
| SON | 16 | 131631 | 1 |
| VICR | 13 | 266143 | 0 |
| Average | 16.1 | 183466 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $183 million. That figure was $973 million in AR’s case. Manpowergroup Inc (NYSE:MAN) is the most popular stock in this table. On the other hand DCP Midstream LP (NYSE:DCP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Antero Resources Corp (NYSE:AR) is more popular among hedge funds. Our overall hedge fund sentiment score for AR is 84.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on AR as the stock returned 3.8% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
Follow Antero Resources Corp (NYSE:AR)
Follow Antero Resources Corp (NYSE:AR)
Suggested Articles:
- 10 Best Dividend Stocks to Buy and Hold According to Tiger Cub Lee Ainslie
- 20 Largest Milk Producing Countries in 2021
- 11 largest oil reserves by country in the world in 2021
Disclosure: None. This article was originally published at Insider Monkey.
