Hedge fund managers like David Einhorn, Bill Ackman, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Exxon Mobil Corporation (NYSE:XOM).
Exxon Mobil Corporation (NYSE:XOM) shareholders have witnessed a decrease in activity from the world's largest hedge funds of late. XOM was in 49 hedge funds' portfolios at the end of the first quarter of 2019. There were 53 hedge funds in our database with XOM positions at the end of the previous quarter. Our calculations also showed that xom isn't among the 30 most popular stocks among hedge funds.
To the average investor there are many gauges market participants have at their disposal to assess stocks. A duo of the less utilized gauges are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can outclass the S&P 500 by a healthy amount (see the details here).
Let's take a peek at the fresh hedge fund action regarding Exxon Mobil Corporation (NYSE:XOM).
What have hedge funds been doing with Exxon Mobil Corporation (NYSE:XOM)?
At the end of the first quarter, a total of 49 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the previous quarter. On the other hand, there were a total of 57 hedge funds with a bullish position in XOM a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Among these funds, Fisher Asset Management held the most valuable stake in Exxon Mobil Corporation (NYSE:XOM), which was worth $404.5 million at the end of the first quarter. On the second spot was Pzena Investment Management which amassed $238.6 million worth of shares. Moreover, Citadel Investment Group, Yacktman Asset Management, and AQR Capital Management were also bullish on Exxon Mobil Corporation (NYSE:XOM), allocating a large percentage of their portfolios to this stock.
Seeing as Exxon Mobil Corporation (NYSE:XOM) has witnessed bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there were a few money managers who were dropping their positions entirely last quarter. It's worth mentioning that John Overdeck and David Siegel's Two Sigma Advisors dropped the largest position of the 700 funds followed by Insider Monkey, totaling an estimated $39.6 million in stock. Paul Singer's fund, Elliott Management, also sold off its stock, about $17.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Exxon Mobil Corporation (NYSE:XOM) but similarly valued. We will take a look at JPMorgan Chase & Co. (NYSE:JPM), Walmart Inc. (NYSE:WMT), Nestle SA (OTCMKTS:NSRGY), and Royal Dutch Shell plc (NYSE:RDS). This group of stocks' market values are similar to XOM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JPM,100,10348850,-1 WMT,57,4392529,-6 NSRGY,4,1617628,0 RDS,33,1708020,0 Average,48.5,4516757,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 48.5 hedge funds with bullish positions and the average amount invested in these stocks was $4517 million. That figure was $1311 million in XOM's case. JPMorgan Chase & Co. (NYSE:JPM) is the most popular stock in this table. On the other hand Nestle SA (OTCMKTS:NSRGY) is the least popular one with only 4 bullish hedge fund positions. Exxon Mobil Corporation (NYSE:XOM) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately XOM wasn't nearly as popular as these 20 stocks and hedge funds that were betting on XOM were disappointed as the stock returned -9.9% during the same period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.