Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow over 700 of the best-performing investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Ecopetrol S.A. (NYSE:EC), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Ecopetrol S.A. (NYSE:EC) undervalued? Money managers are buying. The number of bullish hedge fund bets rose by 2 lately. Our calculations also showed that EC isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a look at the recent hedge fund action surrounding Ecopetrol S.A. (NYSE:EC).
How are hedge funds trading Ecopetrol S.A. (NYSE:EC)?
Heading into the fourth quarter of 2018, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in EC at the beginning of this year. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Ecopetrol S.A. (NYSE:EC), which was worth $204.2 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $46.9 million worth of shares. Moreover, Arrowstreet Capital, Navellier & Associates, and Bailard Inc were also bullish on Ecopetrol S.A. (NYSE:EC), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, created the biggest position in Ecopetrol S.A. (NYSE:EC). Millennium Management had $2.7 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also initiated a $2 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace's Marshall Wace LLP, Robert B. Gillam's McKinley Capital Management, and Mike Vranos's Ellington.
Let's now take a look at hedge fund activity in other stocks similar to Ecopetrol S.A. (NYSE:EC). These stocks are Northrop Grumman Corporation (NYSE:NOC), Simon Property Group, Inc (NYSE:SPG), Lloyds Banking Group PLC (NYSE:LYG), and Illumina, Inc. (NASDAQ:ILMN). This group of stocks' market caps are closest to EC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NOC,33,1286673,-8 SPG,25,812090,5 LYG,5,285815,-1 ILMN,45,1002845,7 Average,27,846856,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $847 million. That figure was $308 million in EC's case. Illumina, Inc. (NASDAQ:ILMN) is the most popular stock in this table. On the other hand Lloyds Banking Group PLC (NYSE:LYG) is the least popular one with only 5 bullish hedge fund positions. Ecopetrol S.A. (NYSE:EC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. In this regard ILMN might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.