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In this article we will check out the progression of hedge fund sentiment towards Chevron Corporation (NYSE:CVX) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Chevron Corporation (NYSE:CVX) was in 51 hedge funds' portfolios at the end of September. The all time high for this statistic is 56. CVX has seen an increase in enthusiasm from smart money of late. There were 50 hedge funds in our database with CVX holdings at the end of June. Our calculations also showed that CVX 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 go over the new hedge fund action surrounding Chevron Corporation (NYSE:CVX).
David Siegel of Two Sigma Advisors
Do Hedge Funds Think CVX Is A Good Stock To Buy Now?
At the end of September, a total of 51 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CVX over the last 25 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Berkshire Hathaway held the most valuable stake in Chevron Corporation (NYSE:CVX), which was worth $2912 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $634.5 million worth of shares. Citadel Investment Group, Renaissance Technologies, and D E Shaw 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 Solus Alternative Asset Management allocated the biggest weight to Chevron Corporation (NYSE:CVX), around 4.35% of its 13F portfolio. Stamos Capital is also relatively very bullish on the stock, designating 3.92 percent of its 13F equity portfolio to CVX.
Consequently, key hedge funds have been driving this bullishness. Two Sigma Advisors, managed by John Overdeck and David Siegel, assembled the most outsized position in Chevron Corporation (NYSE:CVX). Two Sigma Advisors had $30.3 million invested in the company at the end of the quarter. Till Bechtolsheimer's Arosa Capital Management also made a $10.7 million investment in the stock during the quarter. The following funds were also among the new CVX investors: Dmitry Balyasny's Balyasny Asset Management, Clint Carlson's Carlson Capital, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Chevron Corporation (NYSE:CVX) but similarly valued. These stocks are AT&T Inc. (NYSE:T), AbbVie Inc (NYSE:ABBV), Wells Fargo & Company (NYSE:WFC), Merck & Co., Inc. (NYSE:MRK), AstraZeneca plc (NASDAQ:AZN), Novartis AG (NYSE:NVS), and McDonald's Corporation (NYSE:MCD). This group of stocks' market caps resemble CVX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position T,66,3212098,-2 ABBV,81,4140050,-1 WFC,88,6188279,-6 MRK,77,4550626,-2 AZN,41,3757394,4 NVS,22,1439973,0 MCD,58,3339098,-8 Average,61.9,3803931,-2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 61.9 hedge funds with bullish positions and the average amount invested in these stocks was $3804 million. That figure was $4442 million in CVX's case. Wells Fargo & Company (NYSE:WFC) is the most popular stock in this table. On the other hand Novartis AG (NYSE:NVS) is the least popular one with only 22 bullish hedge fund positions. Chevron Corporation (NYSE:CVX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CVX is 55.3. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. A small number of hedge funds were also right about betting on CVX as the stock returned 12.5% since the end of the third quarter (through 11/30) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.