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Is PetroChina Company Limited (PTR) Going to Burn These Hedge Funds?

Reymerlyn Martin

Is PetroChina Company Limited (NYSE:PTR) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

PetroChina Company Limited (NYSE:PTR) investors should be aware of an increase in activity from the world's largest hedge funds of late. PTR was in 11 hedge funds' portfolios at the end of the third quarter of 2019. There were 9 hedge funds in our database with PTR holdings at the end of the previous quarter. Our calculations also showed that PTR 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.

5 Most Popular Stocks Among Hedge Funds

At the moment there are a lot of tools stock market investors put to use to analyze their stock investments. Some of the best tools are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the best hedge fund managers can outperform the market by a healthy amount (see the details here).

[caption id="attachment_746830" align="aligncenter" width="1613"] Matthew Hulsizer of PEAK6 Capital[/caption]

Matthew Hulsizer PEAK6 Capital

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy  based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We're going to check out the recent hedge fund action encompassing PetroChina Company Limited (NYSE:PTR).

How are hedge funds trading PetroChina Company Limited (NYSE:PTR)?

At Q3's end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the second quarter of 2019. On the other hand, there were a total of 14 hedge funds with a bullish position in PTR a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

The largest stake in PetroChina Company Limited (NYSE:PTR) was held by Renaissance Technologies, which reported holding $58.2 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $26.1 million position. Other investors bullish on the company included Millennium Management, AQR Capital Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Sensato Capital Management allocated the biggest weight to PetroChina Company Limited (NYSE:PTR), around 0.2% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, earmarking 0.06 percent of its 13F equity portfolio to PTR.

Now, key hedge funds were leading the bulls' herd. Marshall Wace, managed by Paul Marshall and Ian Wace, created the largest position in PetroChina Company Limited (NYSE:PTR). Marshall Wace had $1.9 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, Gavin Saitowitz and Cisco J. del Valle's Springbok Capital, and Matthew Hulsizer's PEAK6 Capital Management.

Let's check out hedge fund activity in other stocks similar to PetroChina Company Limited (NYSE:PTR). We will take a look at QUALCOMM, Incorporated (NASDAQ:QCOM), Charter Communications, Inc. (NASDAQ:CHTR), Rio Tinto Group (NYSE:RIO), and U.S. Bancorp (NYSE:USB). This group of stocks' market values are similar to PTR's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QCOM,55,1817218,-6 CHTR,63,8306950,-3 RIO,21,1491441,-3 USB,42,8308441,3 Average,45.25,4981013,-2.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 45.25 hedge funds with bullish positions and the average amount invested in these stocks was $4981 million. That figure was $106 million in PTR's case. Charter Communications, Inc. (NASDAQ:CHTR) is the most popular stock in this table. On the other hand Rio Tinto Group (NYSE:RIO) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks PetroChina Company Limited (NYSE:PTR) is even less popular than RIO. Hedge funds dodged a bullet by taking a bearish stance towards PTR. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately PTR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); PTR investors were disappointed as the stock returned -9.8% 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 70 percent of these stocks already outperformed the market so far in Q4.

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

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