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Do Hedge Funds Love Schlumberger Limited. (SLB)?

Abigail Fisher

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Schlumberger Limited. (NYSE:SLB).

Schlumberger Limited. (NYSE:SLB) shareholders have witnessed a decrease in activity from the world's largest hedge funds in recent months. Our calculations also showed that SLB isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the financial world there are numerous gauges stock traders can use to analyze publicly traded companies. Some of the most under-the-radar gauges are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace the broader indices by a very impressive amount (see the details here).

SLB_oct2019

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a look at the key hedge fund action encompassing Schlumberger Limited. (NYSE:SLB).

How are hedge funds trading Schlumberger Limited. (NYSE:SLB)?

At the end of the second quarter, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SLB over the last 16 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

BRIDGEWATER ASSOCIATES

Of the funds tracked by Insider Monkey, Ken Fisher's Fisher Asset Management has the number one position in Schlumberger Limited. (NYSE:SLB), worth close to $469.6 million, corresponding to 0.5% of its total 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $373 million position; 0.2% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism contain Charles de Vaulx's International Value Advisers, William B. Gray's Orbis Investment Management and D. E. Shaw's D E Shaw.

Seeing as Schlumberger Limited. (NYSE:SLB) has experienced a decline in interest from the aggregate hedge fund industry, it's easy to see that there exists a select few money managers that decided to sell off their positions entirely last quarter. Interestingly, Renaissance Technologies sold off the largest investment of all the hedgies monitored by Insider Monkey, comprising close to $135.4 million in stock, and Steve Cohen's Point72 Asset Management was right behind this move, as the fund dumped about $111.4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 8 funds last quarter.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Schlumberger Limited. (NYSE:SLB) but similarly valued. These stocks are The Charles Schwab Corp (NYSE:SCHW), ServiceNow Inc (NYSE:NOW), Norfolk Southern Corp. (NYSE:NSC), and General Dynamics Corporation (NYSE:GD). This group of stocks' market caps match SLB's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SCHW,48,2698349,-3 NOW,77,4250893,12 NSC,54,2126444,7 GD,40,7211925,-2 Average,54.75,4071903,3.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 54.75 hedge funds with bullish positions and the average amount invested in these stocks was $4072 million. That figure was $1851 million in SLB's case. ServiceNow Inc (NYSE:NOW) is the most popular stock in this table. On the other hand General Dynamics Corporation (NYSE:GD) is the least popular one with only 40 bullish hedge fund positions. Schlumberger Limited. (NYSE:SLB) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately SLB wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SLB investors were disappointed as the stock returned -12.7% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

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

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