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2019 Review: Top Hedge Fund Stocks vs. Helmerich & Payne, Inc. (HP)

Nina Todic

While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Helmerich & Payne, Inc. (NYSE:HP) and see how the stock performed in comparison to hedge funds' consensus picks.

Is Helmerich & Payne, Inc. (NYSE:HP) going to take off soon? Prominent investors are turning less bullish. The number of long hedge fund bets dropped by 5 lately. Our calculations also showed that HP isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings). HP was in 28 hedge funds' portfolios at the end of September. There were 33 hedge funds in our database with HP positions at the end of the previous quarter.

To most shareholders, hedge funds are assumed to be slow, outdated investment tools of yesteryear. While there are more than 8000 funds in operation at the moment, We choose to focus on the aristocrats of this group, approximately 750 funds. Most estimates calculate that this group of people command the lion's share of all hedge funds' total asset base, and by keeping track of their inimitable equity investments, Insider Monkey has figured out many investment strategies that have historically exceeded Mr. Market. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

[caption id="attachment_26357" align="aligncenter" width="359"] Ken Fisher of Fisher Asset Management[/caption]

FISHER ASSET MANAGEMENT

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind we're going to take a gander at the key hedge fund action encompassing Helmerich & Payne, Inc. (NYSE:HP).

What does smart money think about Helmerich & Payne, Inc. (NYSE:HP)?

Heading into the fourth quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the previous quarter. By comparison, 33 hedge funds held shares or bullish call options in HP a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Among these funds, Fisher Asset Management held the most valuable stake in Helmerich & Payne, Inc. (NYSE:HP), which was worth $58.8 million at the end of the third quarter. On the second spot was Millennium Management which amassed $37.3 million worth of shares. Renaissance Technologies, D E Shaw, and Royce & Associates 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 Beddow Capital Management allocated the biggest weight to Helmerich & Payne, Inc. (NYSE:HP), around 2.93% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, setting aside 2.73 percent of its 13F equity portfolio to HP.

Judging by the fact that Helmerich & Payne, Inc. (NYSE:HP) has faced bearish sentiment from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of hedgies that elected to cut their full holdings in the third quarter. It's worth mentioning that Robert Polak's Anchor Bolt Capital dropped the largest position of all the hedgies followed by Insider Monkey, worth close to $14.2 million in stock. Ray Dalio's fund, Bridgewater Associates, also said goodbye to its stock, about $5.9 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 5 funds in the third quarter.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Helmerich & Payne, Inc. (NYSE:HP) but similarly valued. We will take a look at Assured Guaranty Ltd. (NYSE:AGO), China Biologic Products Holdings, Inc. (NASDAQ:CBPO), Pinnacle Financial Partners, Inc. (NASDAQ:PNFP), and Companhia Siderurgica Nacional (NYSE:SID). This group of stocks' market values resemble HP's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AGO,35,576379,-1 CBPO,14,504724,5 PNFP,15,84557,-3 SID,7,18261,-3 Average,17.75,295980,-0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $296 million. That figure was $270 million in HP's case. Assured Guaranty Ltd. (NYSE:AGO) is the most popular stock in this table. On the other hand Companhia Siderurgica Nacional (NYSE:SID) is the least popular one with only 7 bullish hedge fund positions. Helmerich & Payne, Inc. (NYSE:HP) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately HP wasn't nearly as popular as these 20 stocks and hedge funds that were betting on HP were disappointed as the stock returned 2.3% in 2019 (through December 23rd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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