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In this article we will check out the progression of hedge fund sentiment towards Continental Resources, Inc. (NYSE:CLR) 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.
Is CLR stock a buy? Continental Resources, Inc. (NYSE:CLR) was in 29 hedge funds' portfolios at the end of December. The all time high for this statistic is 50. CLR has experienced an increase in hedge fund interest lately. There were 25 hedge funds in our database with CLR holdings at the end of September. Our calculations also showed that CLR isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
William Harnisch of Peconic Partners LLC
Keeping this in mind we're going to analyze the latest hedge fund action encompassing Continental Resources, Inc. (NYSE:CLR).
Do Hedge Funds Think CLR Is A Good Stock To Buy Now?
At Q4's end, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CLR over the last 22 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Continental Resources, Inc. (NYSE:CLR) was held by Arrowstreet Capital, which reported holding $49 million worth of stock at the end of December. It was followed by D E Shaw with a $16.4 million position. Other investors bullish on the company included Millennium Management, Point72 Asset Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Arctis Global allocated the biggest weight to Continental Resources, Inc. (NYSE:CLR), around 0.94% of its 13F portfolio. Quantamental Technologies is also relatively very bullish on the stock, setting aside 0.82 percent of its 13F equity portfolio to CLR.
As aggregate interest increased, some big names have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, initiated the biggest position in Continental Resources, Inc. (NYSE:CLR). Point72 Asset Management had $13.9 million invested in the company at the end of the quarter. Robert Bishop's Impala Asset Management also made a $8.6 million investment in the stock during the quarter. The other funds with brand new CLR positions are William Harnisch's Peconic Partners LLC, Viraj Mehta's Arctis Global, and Mark Coe's Intrinsic Edge Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Continental Resources, Inc. (NYSE:CLR) but similarly valued. These stocks are American Well Corporation (NYSE:AMWL), Tandem Diabetes Care Inc (NASDAQ:TNDM), Sonoco Products Company (NYSE:SON), The AZEK Company Inc. (NYSE:AZEK), Choice Hotels International, Inc. (NYSE:CHH), AerCap Holdings N.V. (NYSE:AER), and Janus Henderson Group plc (NYSE:JHG). This group of stocks' market caps match CLR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMWL,19,227459,-6 TNDM,26,231853,-4 SON,20,124098,-9 AZEK,23,261270,-11 CHH,15,120859,-12 AER,40,1395460,2 JHG,22,780607,1 Average,23.6,448801,-5.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.6 hedge funds with bullish positions and the average amount invested in these stocks was $449 million. That figure was $156 million in CLR's case. AerCap Holdings N.V. (NYSE:AER) is the most popular stock in this table. On the other hand Choice Hotels International, Inc. (NYSE:CHH) is the least popular one with only 15 bullish hedge fund positions. Continental Resources, Inc. (NYSE:CLR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CLR is 54.4. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on CLR as the stock returned 54.7% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.