We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Noble Energy, Inc. (NYSE:NBL).
Is Noble Energy, Inc. (NYSE:NBL) the right investment to pursue these days? The best stock pickers are turning bullish. The number of bullish hedge fund positions advanced by 3 lately. Our calculations also showed that NBL isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most traders, hedge funds are viewed as underperforming, old financial tools of the past. While there are over 8000 funds trading at the moment, Our experts look at the masters of this group, around 750 funds. These money managers manage the lion's share of the hedge fund industry's total asset base, and by paying attention to their matchless equity investments, Insider Monkey has spotted a few investment strategies that have historically exceeded Mr. Market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_673972" align="aligncenter" width="473"] Blair Levinsky of Waratah Capital Advisors[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a gander at the key hedge fund action surrounding Noble Energy, Inc. (NYSE:NBL).
Hedge fund activity in Noble Energy, Inc. (NYSE:NBL)
Heading into the fourth quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from one quarter earlier. On the other hand, there were a total of 26 hedge funds with a bullish position in NBL a year ago. With the smart money's capital changing hands, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Adage Capital Management was the largest shareholder of Noble Energy, Inc. (NYSE:NBL), with a stake worth $198 million reported as of the end of September. Trailing Adage Capital Management was Millennium Management, which amassed a stake valued at $192.7 million. Citadel Investment Group, Holocene Advisors, and First Pacific Advisors 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 Cobalt Capital Management allocated the biggest weight to Noble Energy, Inc. (NYSE:NBL), around 3.12% of its portfolio. Yaupon Capital is also relatively very bullish on the stock, setting aside 2.37 percent of its 13F equity portfolio to NBL.
Consequently, key money managers have been driving this bullishness. Holocene Advisors, managed by Brandon Haley, established the biggest position in Noble Energy, Inc. (NYSE:NBL). Holocene Advisors had $12.7 million invested in the company at the end of the quarter. Brad Dunkley and Blair Levinsky's Waratah Capital Advisors also initiated a $9.6 million position during the quarter. The other funds with brand new NBL positions are Steve Pattyn's Yaupon Capital, Michael Kharitonov and Jon David McAuliffe's Voleon Capital, and T Boone Pickens (founder)'s BP Capital.
Let's check out hedge fund activity in other stocks similar to Noble Energy, Inc. (NYSE:NBL). These stocks are CF Industries Holdings, Inc. (NYSE:CF), Sasol Limited (NYSE:SSL), Lamb Weston Holdings, Inc. (NYSE:LW), and UGI Corp (NYSE:UGI). This group of stocks' market caps are similar to NBL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CF,39,956283,4 SSL,8,26026,0 LW,33,438896,4 UGI,19,317167,-1 Average,24.75,434593,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $435 million. That figure was $603 million in NBL's case. CF Industries Holdings, Inc. (NYSE:CF) is the most popular stock in this table. On the other hand Sasol Limited (NYSE:SSL) is the least popular one with only 8 bullish hedge fund positions. Noble Energy, Inc. (NYSE:NBL) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately NBL wasn't nearly as popular as these 20 stocks and hedge funds that were betting on NBL were disappointed as the stock returned -7% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.