In this article you are going to find out whether hedge funds think Equinor ASA (NYSE:EQNR) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is EQNR a good stock to buy now? The smart money was taking an optimistic view. The number of bullish hedge fund bets improved by 10 lately. Equinor ASA (NYSE:EQNR) was in 20 hedge funds' portfolios at the end of September. The all time high for this statistic is 15. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EQNR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are plenty of formulas market participants put to use to value publicly traded companies. Two of the most innovative formulas are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can beat the market by a very impressive margin (see the details here).
Bruce Kovner of Caxton Associates LP
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let's review the recent hedge fund action encompassing Equinor ASA (NYSE:EQNR).
Do Hedge Funds Think EQNR Is A Good Stock To Buy Now?
At third quarter's end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in EQNR a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Equinor ASA (NYSE:EQNR) was held by Renaissance Technologies, which reported holding $107.2 million worth of stock at the end of September. It was followed by Point72 Asset Management with a $64.7 million position. Other investors bullish on the company included Caxton Associates LP, Fisher Asset Management, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Caxton Associates LP allocated the biggest weight to Equinor ASA (NYSE:EQNR), around 3.25% of its 13F portfolio. Deep Basin Capital is also relatively very bullish on the stock, earmarking 1.47 percent of its 13F equity portfolio to EQNR.
As industrywide interest jumped, specific money managers were leading the bulls' herd. Point72 Asset Management, managed by Steve Cohen, established the largest position in Equinor ASA (NYSE:EQNR). Point72 Asset Management had $64.7 million invested in the company at the end of the quarter. Bruce Kovner's Caxton Associates LP also initiated a $30.9 million position during the quarter. The other funds with brand new EQNR positions are Brandon Haley's Holocene Advisors, Matt Smith's Deep Basin Capital, and Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Equinor ASA (NYSE:EQNR) but similarly valued. These stocks are TAL Education Group (NYSE:TAL), Spotify Technology S.A. (NYSE:SPOT), Illumina, Inc. (NASDAQ:ILMN), Atlassian Corporation Plc (NASDAQ:TEAM), Biogen Inc. (NASDAQ:BIIB), Westpac Banking Corporation (NYSE:WBK), and Relx PLC (NYSE:RELX). This group of stocks' market values match EQNR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TAL,41,2136912,1 SPOT,44,1641764,8 ILMN,44,1373332,3 TEAM,48,3228678,-7 BIIB,59,3236819,-4 WBK,4,25293,0 RELX,6,114897,0 Average,35.1,1679671,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.1 hedge funds with bullish positions and the average amount invested in these stocks was $1680 million. That figure was $324 million in EQNR's case. Biogen Inc. (NASDAQ:BIIB) is the most popular stock in this table. On the other hand Westpac Banking Corporation (NYSE:WBK) is the least popular one with only 4 bullish hedge fund positions. Equinor ASA (NYSE:EQNR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EQNR is 54.5. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on EQNR as the stock returned 18.7% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.