Were Hedge Funds Right About Coming Back To Pioneer Natural Resources Company (PXD)?

In this article we will analyze whether Pioneer Natural Resources Company (NYSE:PXD) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Pioneer Natural Resources Company (NYSE:PXD) was in 45 hedge funds’ portfolios at the end of June. The all time high for this statistic is 74. PXD investors should be aware of an increase in hedge fund sentiment lately. There were 37 hedge funds in our database with PXD holdings at the end of March. Our calculations also showed that PXD isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

According to most traders, hedge funds are perceived as slow, old investment vehicles of years past. While there are more than 8000 funds trading at present, Our experts look at the top tier of this club, about 850 funds. It is estimated that this group of investors manage the lion’s share of all hedge funds’ total capital, and by keeping an eye on their inimitable stock picks, Insider Monkey has unearthed numerous investment strategies that have historically exceeded the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Phillip Gross of Adage Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining stock. 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. 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. Keeping this in mind we’re going to take a peek at the new hedge fund action surrounding Pioneer Natural Resources Company (NYSE:PXD).

Do Hedge Funds Think PXD Is A Good Stock To Buy Now?

At the end of June, a total of 45 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PXD over the last 24 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, Adage Capital Management was the largest shareholder of Pioneer Natural Resources Company (NYSE:PXD), with a stake worth $206.9 million reported as of the end of June. Trailing Adage Capital Management was Citadel Investment Group, which amassed a stake valued at $101 million. Millennium Management, Citadel Investment Group, and Holocene 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 Glaxis Capital Management allocated the biggest weight to Pioneer Natural Resources Company (NYSE:PXD), around 6.29% of its 13F portfolio. Alden Global Capital is also relatively very bullish on the stock, dishing out 4.89 percent of its 13F equity portfolio to PXD.

With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Holocene Advisors, managed by Brandon Haley, created the largest position in Pioneer Natural Resources Company (NYSE:PXD). Holocene Advisors had $69 million invested in the company at the end of the quarter. Parvinder Thiara’s Athanor Capital also made a $45.4 million investment in the stock during the quarter. The following funds were also among the new PXD investors: Joseph Samuels’s Islet Management, Charles Davidson and Joseph Jacobs’s Wexford Capital, and Scott Bessent’s Key Square Capital Management.

Let’s go over hedge fund activity in other stocks similar to Pioneer Natural Resources Company (NYSE:PXD). We will take a look at Parker-Hannifin Corporation (NYSE:PH), O’Reilly Automotive Inc (NASDAQ:ORLY), Marathon Petroleum Corp (NYSE:MPC), The Allstate Corporation (NYSE:ALL), Fortinet Inc (NASDAQ:FTNT), Paychex, Inc. (NASDAQ:PAYX), and Rocket Companies, Inc. (NYSE:RKT). All of these stocks’ market caps resemble PXD’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.4 hedge funds with bullish positions and the average amount invested in these stocks was $1323 million. That figure was $876 million in PXD’s case. Marathon Petroleum Corp (NYSE:MPC) is the most popular stock in this table. On the other hand Rocket Companies, Inc. (NYSE:RKT) is the least popular one with only 13 bullish hedge fund positions. Pioneer Natural Resources Company (NYSE:PXD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PXD is 74. 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 through November 5th and still beat the market by 3.1 percentage points. Hedge funds were also right about betting on PXD as the stock returned 15.6% since the end of Q2 (through 11/5) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.