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In this article we will check out the progression of hedge fund sentiment towards YPF Sociedad Anonima (NYSE:YPF) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is YPF Sociedad Anonima (NYSE:YPF) a splendid investment right now? Prominent investors were getting less bullish. The number of long hedge fund positions were cut by 3 recently. YPF Sociedad Anonima (NYSE:YPF) was in 5 hedge funds' portfolios at the end of September. The all time high for this statistics is 32. Our calculations also showed that YPF isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 8 hedge funds in our database with YPF holdings at the end of June.
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 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Donald Sussman of Paloma Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we're going to take a gander at the latest hedge fund action encompassing YPF Sociedad Anonima (NYSE:YPF).
Hedge fund activity in YPF Sociedad Anonima (NYSE:YPF)
At the end of September, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -38% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards YPF over the last 21 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Among these funds, Redwood Capital Management held the most valuable stake in YPF Sociedad Anonima (NYSE:YPF), which was worth $2.9 million at the end of the third quarter. On the second spot was Saba Capital which amassed $2.7 million worth of shares. NWI Management, Citadel Investment Group, 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 Redwood Capital Management allocated the biggest weight to YPF Sociedad Anonima (NYSE:YPF), around 0.22% of its 13F portfolio. NWI Management is also relatively very bullish on the stock, earmarking 0.14 percent of its 13F equity portfolio to YPF.
Due to the fact that YPF Sociedad Anonima (NYSE:YPF) has faced declining sentiment from hedge fund managers, it's safe to say that there lies a certain "tier" of fund managers that elected to cut their positions entirely by the end of the third quarter. At the top of the heap, Renaissance Technologies said goodbye to the largest position of the "upper crust" of funds watched by Insider Monkey, valued at close to $6.5 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also dumped its stock, about $0.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 3 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks similar to YPF Sociedad Anonima (NYSE:YPF). We will take a look at OSI Systems, Inc. (NASDAQ:OSIS), Freedom Holding Corp. (NASDAQ:FRHC), PQ Group Holdings Inc. (NYSE:PQG), ALX Oncology Holdings Inc. (NASDAQ:ALXO), Two Harbors Investment Corp (NYSE:TWO), Axos Financial, Inc. (NYSE:AX), and Mednax Inc. (NYSE:MD). This group of stocks' market valuations are similar to YPF's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OSIS,17,70797,4 FRHC,6,26711,3 PQG,13,36502,7 ALXO,9,361214,9 TWO,17,36539,1 AX,15,48303,-2 MD,22,338189,-1 Average,14.1,131179,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $131 million. That figure was $9 million in YPF's case. Mednax Inc. (NYSE:MD) is the most popular stock in this table. On the other hand Freedom Holding Corp. (NASDAQ:FRHC) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks YPF Sociedad Anonima (NYSE:YPF) is even less popular than FRHC. Our overall hedge fund sentiment score for YPF is 6.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds clearly dropped the ball on YPF as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on YPF as the stock returned 51.3% since Q3 (through November 27th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.