Concerns over a shift in Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25, 2015 and October 30, 2015. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards EOG Resources Inc (NYSE:EOG).
Is EOG Resources Inc (NYSE:EOG) undervalued? The smart money is buying. The number of long hedge fund bets advanced by 3 recently. EOG was in 60 hedge funds’ portfolios at the end of the third quarter of 2015. There were 57 hedge funds in our database with EOG positions at the end of the previous quarter. At the end of this article we will also compare EOG to other stocks including Monsanto Company (NYSE:MON), Kimberly Clark Corp (NYSE:KMB), and Caterpillar Inc. (NYSE:CAT) to get a better sense of its popularity.
Follow Eog Resources Inc (NYSE:EOG)
Follow Eog Resources Inc (NYSE:EOG)
At the moment there are many methods stock traders can use to size up publicly traded companies. Some of the less utilized methods are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the top hedge fund managers can outperform the market by a significant amount (see the details here).
Keeping this in mind, we’re going to take a look at the recent action surrounding EOG Resources Inc (NYSE:EOG).
What have hedge funds been doing with EOG Resources Inc (NYSE:EOG)?
At the end of the third quarter, a total of 60 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in EOG Resources Inc (NYSE:EOG). Citadel Investment Group has a $194.9 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Ross Margolies of Stelliam Investment Management, with a $128.4 million call position; 3.2% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism encompass D. E. Shaw’s D E Shaw, Ross Margolies’s Stelliam Investment Management and Israel Englander’s Millennium Management.
As aggregate interest increased, key hedge funds have been driving this bullishness. Stelliam Investment Management, managed by Ross Margolies, assembled the most outsized call position in EOG Resources Inc (NYSE:EOG). Stelliam Investment Management had $128.4 million invested in the company at the end of the quarter. John Labanowski’s Brenham Capital Management also made a $58.2 million investment in the stock during the quarter. The other funds with brand new EOG positions are Rob Citrone’s Discovery Capital Management, Todd J. Kantor’s Encompass Capital Advisors, and Wallace Weitz’s Wallace R. Weitz & Co..
Let’s check out hedge fund activity in other stocks similar to EOG Resources Inc (NYSE:EOG). We will take a look at Monsanto Company (NYSE:MON), Kimberly Clark Corp (NYSE:KMB), Caterpillar Inc. (NYSE:CAT), and Capital One Financial Corp. (NYSE:COF). This group of stocks’ market valuations resemble EOG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MON | 60 | 3048446 | -4 |
| KMB | 34 | 1189525 | 3 |
| CAT | 40 | 1236703 | 10 |
| COF | 53 | 1466178 | 12 |
As you can see these stocks had an average of 46.75 hedge funds with bullish positions and the average amount invested in these stocks was $1,735 million. That figure was $1,539 million in EOG’s case. Monsanto Company (NYSE:MON) is the most popular stock in this table. On the other hand Kimberly Clark Corp (NYSE:KMB) is the least popular one with only 34 bullish hedge fund positions. EOG Resources Inc (NYSE:EOG) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal which makes EOG worth a closer look for long term investors.
