The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Whiting Petroleum Corp (NYSE:WLL), and what that likely means for the prospects of the company and its stock.
Whiting Petroleum Corp (NYSE:WLL) has seen a decrease in support from the world’s most elite money managers in recent months. 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 Nabors Industries Ltd. (NYSE:NBR), Tallgrass Energy GP LP (NYSE:TEGP), and Healthcare Trust Of America Inc (NYSE:HTA) to gather more data points.
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In the financial world, there are a large number of signals stock market investors can use to value their holdings. Two of the less known signals are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the best fund managers can trounce the broader indices by a healthy amount (see the details here).
Now, let’s check out the latest action surrounding Whiting Petroleum Corp (NYSE:WLL).
How are hedge funds trading Whiting Petroleum Corp (NYSE:WLL)?
Heading into Q4, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 21% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, John Paulson’s Paulson & Co has the most valuable position in Whiting Petroleum Corp (NYSE:WLL), worth close to $146.6 million, accounting for 0.8% of its total 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which holds a $134.9 million position; 0.3% of its 13F portfolio is allocated to the company. Other professional money managers with similar optimism include Ken Griffin’s Citadel Investment Group, Dmitry Balyasny’s Balyasny Asset Management, and Brian Taylor’s Pine River Capital Management.
Judging by the fact that Whiting Petroleum Corp (NYSE:WLL) has faced a declining sentiment from hedge fund managers, it’s safe to say that there was a specific group of hedgies who were dropping their entire stakes in the third quarter. Intriguingly, Zach Schreiber’s Point State Capital sold off the biggest position of the 700 funds followed by Insider Monkey, comprising about $108.5 million in stock. Doug Silverman and Alexander Klabin’s fund, Senator Investment Group, also cut its stock, about $100.8 million worth of shares. These transactions are interesting, as total hedge fund interest fell by 11 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to Whiting Petroleum Corp (NYSE:WLL). These stocks are Nabors Industries Ltd. (NYSE:NBR), Tallgrass Energy GP LP (NYSE:TEGP), Healthcare Trust Of America Inc (NYSE:HTA), and bluebird bio Inc (NASDAQ:BLUE). This group of stocks’ market valuations matches Whiting Petroleum Corp (NYSE:WLL)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NBR | 22 | 229973 | -4 |
| TEGP | 10 | 56213 | 1 |
| HTA | 12 | 108856 | 3 |
| BLUE | 28 | 323352 | -13 |
As you can see, these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $180 million. That figure was $767 million in Whiting Petroleum Corp (NYSE:WLL)’s case. bluebird bio Inc (NASDAQ:BLUE) is the most popular stock in this table. On the other hand, Tallgrass Energy GP LP (NYSE:TEGP) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks, Whiting Petroleum Corp (NYSE:WLL) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
