Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The fourth quarter of 2018 is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by nearly 7 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Helmerich & Payne, Inc. (NYSE:HP).
At the moment there are several gauges shareholders put to use to grade publicly traded companies. Two of the less known gauges are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can beat the S&P 500 by a healthy amount (see the details here).
Let's review the latest hedge fund action encompassing Helmerich & Payne, Inc. (NYSE:HP).
How have hedgies been trading Helmerich & Payne, Inc. (NYSE:HP)?
Heading into the first quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HP over the last 14 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Millennium Management was the largest shareholder of Helmerich & Payne, Inc. (NYSE:HP), with a stake worth $111.4 million reported as of the end of December. Trailing Millennium Management was AQR Capital Management, which amassed a stake valued at $56.8 million. Fisher Asset Management, Citadel Investment Group, and Royce & Associates were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as Helmerich & Payne, Inc. (NYSE:HP) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there exists a select few fund managers that elected to cut their positions entirely last quarter. At the top of the heap, Vince Maddi and Shawn Brennan's SIR Capital Management cut the biggest investment of the "upper crust" of funds tracked by Insider Monkey, comprising close to $10.1 million in stock, and Sara Nainzadeh's Centenus Global Management was right behind this move, as the fund sold off about $4.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 6 funds last quarter.
Let's also examine hedge fund activity in other stocks similar to Helmerich & Payne, Inc. (NYSE:HP). These stocks are H&R Block, Inc. (NYSE:HRB), Phillips 66 Partners LP (NYSE:PSXP), EQT Midstream Partners LP (NYSE:EQM), and Watsco Inc (NYSE:WSO). This group of stocks' market values are similar to HP's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HRB,18,251709,0 PSXP,6,11676,2 EQM,8,53758,0 WSO,14,134848,-3 Average,11.5,112998,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $113 million. That figure was $429 million in HP's case. H&R Block, Inc. (NYSE:HRB) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Helmerich & Payne, Inc. (NYSE:HP) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on HP as the stock returned 36.3% and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.