A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31, so let’s proceed with the discussion of the hedge fund sentiment on Matador Resources Co (NYSE:MTDR).
Is Matador Resources Co (NYSE:MTDR) the right pick for your portfolio? The smart money is getting more optimistic. The number of long hedge fund positions rose by 4 recently. Our calculations also showed that MTDR isn't among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to check out the key hedge fund action surrounding Matador Resources Co (NYSE:MTDR).
What does smart money think about Matador Resources Co (NYSE:MTDR)?
At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MTDR over the last 15 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Millennium Management, managed by Israel Englander, holds the biggest position in Matador Resources Co (NYSE:MTDR). Millennium Management has a $64.2 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, led by Ken Griffin, holding a $21.9 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish comprise Todd J. Kantor's Encompass Capital Advisors, Chuck Royce's Royce & Associates and Noam Gottesman's GLG Partners.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Encompass Capital Advisors, managed by Todd J. Kantor, initiated the biggest position in Matador Resources Co (NYSE:MTDR). Encompass Capital Advisors had $19.3 million invested in the company at the end of the quarter. Noam Gottesman's GLG Partners also initiated a $8.3 million position during the quarter. The following funds were also among the new MTDR investors: Principal Global Investors's Columbus Circle Investors, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and D. E. Shaw's D E Shaw.
Let's now review hedge fund activity in other stocks similar to Matador Resources Co (NYSE:MTDR). We will take a look at Norbord Inc. (NYSE:OSB), Workiva Inc (NYSE:WK), Hamilton Lane Incorporated (NASDAQ:HLNE), and Independent Bank Group Inc (NASDAQ:IBTX). This group of stocks' market values are closest to MTDR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OSB,7,26488,0 WK,17,234532,1 HLNE,10,54571,1 IBTX,10,127668,-3 Average,11,110815,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $111 million. That figure was $139 million in MTDR's case. Workiva Inc (NYSE:WK) is the most popular stock in this table. On the other hand Norbord Inc. (NYSE:OSB) is the least popular one with only 7 bullish hedge fund positions. Matador Resources Co (NYSE:MTDR) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately MTDR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on MTDR were disappointed as the stock returned -7.2% 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.