How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Occidental Petroleum Corporation (NYSE:OXY) and determine whether hedge funds had an edge regarding this stock.
Occidental Petroleum Corporation (NYSE:OXY) has seen an increase in support from the world’s most elite money managers lately. Occidental Petroleum Corporation (NYSE:OXY) was in 60 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 62. There were 57 hedge funds in our database with OXY positions at the end of the second quarter. Our calculations also showed that OXY 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. Keeping this in mind we’re going to analyze the new hedge fund action surrounding Occidental Petroleum Corporation (NYSE:OXY).
Do Hedge Funds Think OXY Is A Good Stock To Buy Now?
At third quarter’s end, a total of 60 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the previous quarter. By comparison, 43 hedge funds held shares or bullish call options in OXY a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Occidental Petroleum Corporation (NYSE:OXY) was held by Icahn Capital LP, which reported holding $1331.1 million worth of stock at the end of September. It was followed by GQG Partners with a $587.2 million position. Other investors bullish on the company included Appaloosa Management LP, Icahn Capital LP, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Key Square Capital Management allocated the biggest weight to Occidental Petroleum Corporation (NYSE:OXY), around 10.67% of its 13F portfolio. Icahn Capital LP is also relatively very bullish on the stock, setting aside 5.91 percent of its 13F equity portfolio to OXY.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the largest position in Occidental Petroleum Corporation (NYSE:OXY). Balyasny Asset Management had $34.6 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $14.8 million position during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Frank Fu’s CaaS Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now take a look at hedge fund activity in other stocks similar to Occidental Petroleum Corporation (NYSE:OXY). These stocks are Zebra Technologies Corporation (NASDAQ:ZBRA), PACCAR Inc (NASDAQ:PCAR), Delta Air Lines, Inc. (NYSE:DAL), Skyworks Solutions Inc (NASDAQ:SWKS), Bill.com Holdings, Inc. (NYSE:BILL), Li Auto Inc. (NASDAQ:LI), and Laboratory Corp. of America Holdings (NYSE:LH). All of these stocks’ market caps resemble OXY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ZBRA | 39 | 1304604 | 5 |
| PCAR | 26 | 472066 | -2 |
| DAL | 50 | 1217986 | 1 |
| SWKS | 36 | 805593 | -1 |
| BILL | 65 | 4287204 | 12 |
| LI | 20 | 468125 | 0 |
| LH | 58 | 2706360 | 5 |
| Average | 42 | 1608848 | 2.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 42 hedge funds with bullish positions and the average amount invested in these stocks was $1609 million. That figure was $3190 million in OXY’s case. Bill.com Holdings, Inc. (NYSE:BILL) is the most popular stock in this table. On the other hand Li Auto Inc. (NASDAQ:LI) is the least popular one with only 20 bullish hedge fund positions. Occidental Petroleum Corporation (NYSE:OXY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OXY is 81.5. 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 OXY as the stock returned 27.4% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Occidental Petroleum Corp (NYSE:OXY)
Follow Occidental Petroleum Corp (NYSE:OXY)
Suggested Articles:
- 10 Best Hardware Stocks to Buy Now
- 16 Largest Drug Companies In the World
- Top 20 Gold Mining Companies
Disclosure: None. This article was originally published at Insider Monkey.
