We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article, we look at what those funds think of Callon Petroleum Company (NYSE:CPE) based on that data.
Callon Petroleum Company (NYSE:CPE) investors should be aware of an increase in hedge fund interest of late. Callon Petroleum Company (NYSE:CPE) was in 16 hedge funds’ portfolios at the end of March. The all time high for this statistic is 38. Our calculations also showed that CPE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 115 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.
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a gander at the fresh hedge fund action surrounding Callon Petroleum Company (NYSE:CPE).
Do Hedge Funds Think CPE Is A Good Stock To Buy Now?
At first quarter’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 129% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in CPE a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, D E Shaw held the most valuable stake in Callon Petroleum Company (NYSE:CPE), which was worth $28.5 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $25.2 million worth of shares. Citadel Investment Group, Citadel Investment Group, and Millennium 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 Intrinsic Edge Capital allocated the biggest weight to Callon Petroleum Company (NYSE:CPE), around 0.32% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, earmarking 0.05 percent of its 13F equity portfolio to CPE.
Consequently, specific money managers were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, initiated the most valuable position in Callon Petroleum Company (NYSE:CPE). Two Sigma Advisors had $5.1 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $3.8 million position during the quarter. The other funds with new positions in the stock are D. E. Shaw’s D E Shaw, Matthew Hulsizer’s PEAK6 Capital Management, and Israel Englander’s Millennium Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Callon Petroleum Company (NYSE:CPE) but similarly valued. These stocks are BrightView Holdings, Inc. (NYSE:BV), Pandion Therapeutics Inc. (NASDAQ:PAND), AMTD International Inc. (NYSE:HKIB), Kronos Worldwide, Inc. (NYSE:KRO), Deluxe Corporation (NYSE:DLX), Realogy Holdings Corp (NYSE:RLGY), and GoPro Inc (NASDAQ:GPRO). This group of stocks’ market values resemble CPE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BV | 11 | 219755 | 0 |
| PAND | 14 | 166657 | 4 |
| HKIB | 2 | 8546 | 1 |
| KRO | 9 | 31288 | 1 |
| DLX | 12 | 55786 | -5 |
| RLGY | 22 | 257095 | -4 |
| GPRO | 36 | 395112 | 8 |
| Average | 15.1 | 162034 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $162 million. That figure was $94 million in CPE’s case. GoPro Inc (NASDAQ:GPRO) is the most popular stock in this table. On the other hand AMTD International Inc. (NYSE:HKIB) is the least popular one with only 2 bullish hedge fund positions. Callon Petroleum Company (NYSE:CPE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CPE is 43.2. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately CPE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CPE were disappointed as the stock returned 4.4% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Callon Petroleum Co (NYSE:CPE)
Follow Callon Petroleum Co (NYSE:CPE)
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Disclosure: None. This article was originally published at Insider Monkey.
