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Did Hedge Funds Drop The Ball On Anadarko Petroleum Corporation (APC)?

Nina Todic

Before we spend countless hours researching a company, we'd like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Anadarko Petroleum Corporation (NYSE:APC).

Anadarko Petroleum Corporation (NYSE:APC) has experienced a decrease in hedge fund sentiment in recent months. Our calculations also showed that apc isn't among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_30647" align="aligncenter" width="478"] Boykin Curry of Eagle Capital[/caption]

Boykin Curry EAGLE CAPITAL MANAGEMENT

Let's take a look at the new hedge fund action encompassing Anadarko Petroleum Corporation (NYSE:APC).

How are hedge funds trading Anadarko Petroleum Corporation (NYSE:APC)?

At the end of the first quarter, a total of 50 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards APC over the last 15 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with APC Positions

The largest stake in Anadarko Petroleum Corporation (NYSE:APC) was held by Adage Capital Management, which reported holding $436.9 million worth of stock at the end of March. It was followed by Millennium Management with a $347.8 million position. Other investors bullish on the company included Point72 Asset Management, Eagle Capital Management, and Citadel Investment Group.

Due to the fact that Anadarko Petroleum Corporation (NYSE:APC) has faced declining sentiment from the smart money, it's safe to say that there were a few hedgies who sold off their positions entirely last quarter. At the top of the heap, Todd J. Kantor's Encompass Capital Advisors dumped the largest investment of the "upper crust" of funds watched by Insider Monkey, comprising about $52.6 million in stock. Daniel Arbess's fund, Perella Weinberg Partners, also said goodbye to its stock, about $33.6 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 4 funds last quarter.

Let's go over hedge fund activity in other stocks similar to Anadarko Petroleum Corporation (NYSE:APC). We will take a look at Willis Towers Watson Public Limited Company (NASDAQ:WLTW), Synchrony Financial (NYSE:SYF), Fox Corporation (NASDAQ:FOXA), and Fox Corporation (NASDAQ:FOX). This group of stocks' market caps resemble APC's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WLTW,33,1631672,8 SYF,45,2701973,5 FOXA,71,4255471,1 FOX,40,1343889,-4 Average,47.25,2483251,2.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 47.25 hedge funds with bullish positions and the average amount invested in these stocks was $2483 million. That figure was $2096 million in APC's case. Fox Corporation (NASDAQ:FOXA) is the most popular stock in this table. On the other hand Willis Towers Watson Public Limited Company (NASDAQ:WLTW) is the least popular one with only 33 bullish hedge fund positions. Anadarko Petroleum Corporation (NYSE:APC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on APC as the stock returned 55.9% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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

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