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Is HP A Good Stock To Buy Now According To Hedge Funds?

Abigail Fisher
·6 min read

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Helmerich & Payne, Inc. (NYSE:HP).

Is HP a good stock to buy now? Prominent investors were turning less bullish. The number of bullish hedge fund positions decreased by 2 in recent months. Helmerich & Payne, Inc. (NYSE:HP) was in 31 hedge funds' portfolios at the end of September. The all time high for this statistic is 33. Our calculations also showed that HP 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 33 hedge funds in our database with HP holdings at the end of June. Video: Watch our video about the top 5 most popular hedge fund stocks.

Today there are many gauges investors can use to size up publicly traded companies. A pair of the best gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can beat the S&P 500 by a healthy margin (see the details here).

Gifford Combs - Dalton Investments
Gifford Combs - Dalton Investments

Gifford Combs of Dalton Investments

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 let's take a look at the recent hedge fund action regarding Helmerich & Payne, Inc. (NYSE:HP).

Do Hedge Funds Think HP Is A Good Stock To Buy Now?

At third quarter's end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HP over the last 21 quarters. With the smart money's sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

More specifically, Magnolia Capital Fund was the largest shareholder of Helmerich & Payne, Inc. (NYSE:HP), with a stake worth $29.3 million reported as of the end of September. Trailing Magnolia Capital Fund was Two Sigma Advisors, which amassed a stake valued at $28.8 million. Fisher Asset Management, Renaissance Technologies, and Arrowstreet Capital 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 Magnolia Capital Fund allocated the biggest weight to Helmerich & Payne, Inc. (NYSE:HP), around 4.28% of its 13F portfolio. Kettle Hill Capital Management is also relatively very bullish on the stock, setting aside 1.36 percent of its 13F equity portfolio to HP.

Judging by the fact that Helmerich & Payne, Inc. (NYSE:HP) has witnessed a decline in interest from the smart money, it's safe to say that there is a sect of fund managers that elected to cut their full holdings by the end of the third quarter. Interestingly, Brandon Haley's Holocene Advisors dropped the biggest investment of all the hedgies monitored by Insider Monkey, totaling about $7.9 million in stock, and Michael Burry's Scion Asset Management was right behind this move, as the fund cut about $7.3 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.

Let's check out hedge fund activity in other stocks similar to Helmerich & Payne, Inc. (NYSE:HP). These stocks are Spirit Airlines Incorporated (NYSE:SAVE), Texas Capital Bancshares Inc (NASDAQ:TCBI), Paramount Group Inc (NYSE:PGRE), Boise Cascade Co (NYSE:BCC), Liberty Latin America Ltd. (NASDAQ:LILAK), Verra Mobility Corporation (NASDAQ:VRRM), and Cardiovascular Systems Inc (NASDAQ:CSII). All of these stocks' market caps are closest to HP's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SAVE,27,156821,4 TCBI,20,98996,-1 PGRE,17,125514,-4 BCC,25,65613,12 LILAK,28,313011,1 VRRM,19,220734,-6 CSII,22,155492,2 Average,22.6,162312,1.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $162 million. That figure was $166 million in HP's case. Liberty Latin America Ltd. (NASDAQ:LILAK) is the most popular stock in this table. On the other hand Paramount Group Inc (NYSE:PGRE) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Helmerich & Payne, Inc. (NYSE:HP) is more popular among hedge funds. Our overall hedge fund sentiment score for HP is 81.2. 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. 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 returned 33.3% in 2020 through December 18th but still managed to beat the market by 16.4 percentage points. Hedge funds were also right about betting on HP as the stock returned 72.7% since the end of September (through 12/18) 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.

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Disclosure: None. This article was originally published at Insider Monkey.

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