Where Do Hedge Funds Stand On Canadian Natural Resources Limited (CNQ)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Canadian Natural Resources Limited (NYSE:CNQ) in this article.

Hedge fund interest in Canadian Natural Resources Limited (NYSE:CNQ) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CNQ isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as National Grid plc (NYSE:NGG), Spotify Technology S.A. (NYSE:SPOT), and Dow Inc. (NYSE:DOW) to gather more data points.

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 let’s take a glance at the recent hedge fund action regarding Canadian Natural Resources Limited (NYSE:CNQ).

Blair Levinsky of Waratah Capital Advisors

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

At Q3’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2021. On the other hand, there were a total of 30 hedge funds with a bullish position in CNQ a year ago. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Yacktman Asset Management, managed by Donald Yacktman, holds the biggest position in Canadian Natural Resources Limited (NYSE:CNQ). Yacktman Asset Management has a $608.1 million position in the stock, comprising 5.8% of its 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $92.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that hold long positions encompass D. E. Shaw’s D E Shaw, Noam Gottesman’s GLG Partners and Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors. In terms of the portfolio weights assigned to each position Yacktman Asset Management allocated the biggest weight to Canadian Natural Resources Limited (NYSE:CNQ), around 5.85% of its 13F portfolio. Elm Ridge Capital is also relatively very bullish on the stock, earmarking 5.73 percent of its 13F equity portfolio to CNQ.

Seeing as Canadian Natural Resources Limited (NYSE:CNQ) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of hedge funds that slashed their full holdings in the third quarter. Intriguingly, Anand Parekh’s Alyeska Investment Group dumped the largest investment of all the hedgies tracked by Insider Monkey, valued at close to $15.7 million in stock. Charles Davidson and Joseph Jacobs’s fund, Wexford Capital, also dropped its stock, about $15.1 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Canadian Natural Resources Limited (NYSE:CNQ) but similarly valued. These stocks are National Grid plc (NYSE:NGG), Spotify Technology S.A. (NYSE:SPOT), Dow Inc. (NYSE:DOW), Simon Property Group, Inc (NYSE:SPG), Microchip Technology Incorporated (NASDAQ:MCHP), Vodafone Group Plc (NASDAQ:VOD), and Biogen Inc. (NASDAQ:BIIB). This group of stocks’ market values are closest to CNQ’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.9 hedge funds with bullish positions and the average amount invested in these stocks was $1212 million. That figure was $957 million in CNQ’s case. Biogen Inc. (NASDAQ:BIIB) is the most popular stock in this table. On the other hand National Grid plc (NYSE:NGG) is the least popular one with only 5 bullish hedge fund positions. Canadian Natural Resources Limited (NYSE:CNQ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CNQ is 46.9. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. A small number of hedge funds were also right about betting on CNQ as the stock returned 15.1% since the end of the third quarter (through 12/9) and outperformed the market by an even larger margin.

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