Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Occidental Petroleum Corporation (NYSE:OXY) based on that data.
Is Occidental Petroleum Corporation (NYSE:OXY) a buy here? Hedge funds are getting less optimistic. The number of long hedge fund positions fell by 9 lately. Our calculations also showed that OXY isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). OXY was in 35 hedge funds' portfolios at the end of the first quarter of 2020. There were 44 hedge funds in our database with OXY positions at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
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 51 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to analyze the recent hedge fund action encompassing Occidental Petroleum Corporation (NYSE:OXY).
What have hedge funds been doing with Occidental Petroleum Corporation (NYSE:OXY)?
At Q1's end, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the previous quarter. On the other hand, there were a total of 35 hedge funds with a bullish position in OXY a year ago. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Icahn Capital LP was the largest shareholder of Occidental Petroleum Corporation (NYSE:OXY), with a stake worth $1026.3 million reported as of the end of September. Trailing Icahn Capital LP was Berkshire Hathaway, which amassed a stake valued at $219.2 million. Renaissance Technologies, Millennium Management, and Citadel Investment Group 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 Icahn Capital LP allocated the biggest weight to Occidental Petroleum Corporation (NYSE:OXY), around 5.7% of its 13F portfolio. Stamos Capital is also relatively very bullish on the stock, dishing out 1.92 percent of its 13F equity portfolio to OXY.
Since Occidental Petroleum Corporation (NYSE:OXY) has experienced bearish sentiment from hedge fund managers, it's easy to see that there is a sect of hedge funds who sold off their full holdings heading into Q4. Intriguingly, Todd J. Kantor's Encompass Capital Advisors said goodbye to the biggest stake of all the hedgies watched by Insider Monkey, worth close to $46.4 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund dropped about $24.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 9 funds heading into Q4.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Occidental Petroleum Corporation (NYSE:OXY) but similarly valued. We will take a look at Pembina Pipeline Corp (NYSE:PBA), Icahn Enterprises LP (NASDAQ:IEP), Ingersoll Rand Inc. (NYSE:IR), and CenturyLink, Inc. (NYSE:CTL). This group of stocks' market caps resemble OXY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PBA,15,52363,-2 IEP,3,9602364,-1 IR,33,490015,-14 CTL,34,774832,0 Average,21.25,2729894,-4.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $2730 million. That figure was $1385 million in OXY's case. CenturyLink, Inc. (NYSE:CTL) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Occidental Petroleum Corporation (NYSE:OXY) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately OXY wasn't nearly as popular as these 10 stocks and hedge funds that were betting on OXY were disappointed as the stock returned 11.8% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.