We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Exxon Mobil Corporation (NYSE:XOM) and determine whether hedge funds skillfully traded this stock.
Exxon Mobil Corporation (NYSE:XOM) shareholders have witnessed a decrease in enthusiasm from smart money in recent months. Exxon Mobil Corporation (NYSE:XOM) was in 64 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 68. Our calculations also showed that XOM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
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. Now we’re going to take a peek at the fresh hedge fund action surrounding Exxon Mobil Corporation (NYSE:XOM).
Ken Griffin of Citadel Investment Group
Do Hedge Funds Think XOM Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 64 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in XOM over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, GQG Partners was the largest shareholder of Exxon Mobil Corporation (NYSE:XOM), with a stake worth $1563.9 million reported as of the end of September. Trailing GQG Partners was Fisher Asset Management, which amassed a stake valued at $516.1 million. Adage Capital Management, Citadel Investment Group, and Pzena Investment Management 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 Engine No. 1 LLC allocated the biggest weight to Exxon Mobil Corporation (NYSE:XOM), around 14.22% of its 13F portfolio. Inclusive Capital is also relatively very bullish on the stock, setting aside 10.77 percent of its 13F equity portfolio to XOM.
Seeing as Exxon Mobil Corporation (NYSE:XOM) has faced declining sentiment from the smart money, it’s safe to say that there were a few funds that decided to sell off their positions entirely in the third quarter. At the top of the heap, William Harnisch’s Peconic Partners LLC dumped the largest investment of the “upper crust” of funds monitored by Insider Monkey, worth about $25.2 million in stock. Frank Brosens’s fund, Taconic Capital, also said goodbye to its stock, about $15.8 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 4 funds in the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Exxon Mobil Corporation (NYSE:XOM) but similarly valued. We will take a look at Toyota Motor Corporation (NYSE:TM), Pfizer Inc. (NYSE:PFE), Oracle Corporation (NYSE:ORCL), NIKE, Inc. (NYSE:NKE), Cisco Systems, Inc. (NASDAQ:CSCO), The Coca-Cola Company (NYSE:KO), and Thermo Fisher Scientific Inc. (NYSE:TMO). This group of stocks’ market caps match XOM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TM | 10 | 876130 | -2 |
| PFE | 74 | 2662716 | 7 |
| ORCL | 56 | 3473487 | 1 |
| NKE | 70 | 5682126 | 3 |
| CSCO | 63 | 3937668 | 3 |
| KO | 61 | 25137199 | -1 |
| TMO | 94 | 8210112 | 7 |
| Average | 61.1 | 7139920 | 2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 61.1 hedge funds with bullish positions and the average amount invested in these stocks was $7140 million. That figure was $4640 million in XOM’s case. Thermo Fisher Scientific Inc. (NYSE:TMO) is the most popular stock in this table. On the other hand Toyota Motor Corporation (NYSE:TM) is the least popular one with only 10 bullish hedge fund positions. Exxon Mobil Corporation (NYSE:XOM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for XOM is 61.4. 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 beat the market by 3.6 percentage points. Hedge funds were also right about betting on XOM as the stock returned 30.9% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Exxon Mobil Corp (NYSE:XOM)
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Disclosure: None. This article was originally published at Insider Monkey.
