Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Helmerich & Payne, Inc. (NYSE:HP) in this article.
Is Helmerich & Payne, Inc. (NYSE:HP) a buy right now? The smart money is taking a bullish view. The number of bullish hedge fund positions went up by 4 lately. Our calculations also showed that HP isn't among the 30 most popular stocks among hedge funds. HP was in 31 hedge funds' portfolios at the end of the first quarter of 2019. There were 27 hedge funds in our database with HP positions at the end of the previous quarter.
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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We're going to take a gander at the recent hedge fund action surrounding Helmerich & Payne, Inc. (NYSE:HP).
Hedge fund activity in Helmerich & Payne, Inc. (NYSE:HP)
At Q1's end, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the previous quarter. By comparison, 27 hedge funds held shares or bullish call options in HP 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.
Among these funds, Citadel Investment Group held the most valuable stake in Helmerich & Payne, Inc. (NYSE:HP), which was worth $83.1 million at the end of the first quarter. On the second spot was Fisher Asset Management which amassed $47 million worth of shares. Moreover, AQR Capital Management, Royce & Associates, and Millennium Management were also bullish on Helmerich & Payne, Inc. (NYSE:HP), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, some big names have been driving this bullishness. Holocene Advisors, managed by Brandon Haley, assembled the most outsized position in Helmerich & Payne, Inc. (NYSE:HP). Holocene Advisors had $9.1 million invested in the company at the end of the quarter. Ray Dalio's Bridgewater Associates also made a $7.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Alexander Mitchell's Scopus Asset Management, Paul Marshall and Ian Wace's Marshall Wace LLP, and Joel Greenblatt's Gotham Asset Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Helmerich & Payne, Inc. (NYSE:HP) but similarly valued. These stocks are USG Corporation (NYSE:USG), Cronos Group Inc. (NASDAQ:CRON), Reliance Steel & Aluminum Co. (NYSE:RS), and SolarWinds Inc (NYSE:SWI). This group of stocks' market valuations resemble HP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position USG,23,2358109,3 CRON,7,38000,1 RS,23,321886,3 SWI,15,2759439,0 Average,17,1369359,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $1369 million. That figure was $399 million in HP's case. USG Corporation (NYSE:USG) is the most popular stock in this table. On the other hand Cronos Group Inc. (NASDAQ:CRON) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Helmerich & Payne, Inc. (NYSE:HP) is more popular among hedge funds. 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 HP wasn't nearly as popular as these 20 stocks and hedge funds that were betting on HP were disappointed as the stock returned -8.6% 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 in Q2.
Disclosure: None. This article was originally published at Insider Monkey.