Is QEP Resources Inc (NYSE:QEP) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
QEP Resources Inc (NYSE:QEP) shareholders have witnessed an increase in enthusiasm from smart money of late. Our calculations also showed that QEP 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.
In the 21st century investor’s toolkit there are a large number of signals market participants have at their disposal to assess their holdings. Some of the best signals are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the best money managers can outpace their index-focused peers by a superb margin (see the details here).
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Paul Singer of Elliott Management[/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 review the key hedge fund action encompassing QEP Resources Inc (NYSE:QEP).
Hedge fund activity in QEP Resources Inc (NYSE:QEP)
At Q3's end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards QEP over the last 17 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Among these funds, Elliott Management held the most valuable stake in QEP Resources Inc (NYSE:QEP), which was worth $43.3 million at the end of the third quarter. On the second spot was Millennium Management which amassed $29.8 million worth of shares. D E Shaw, Citadel Investment Group, and Alyeska 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 Elliott Management allocated the biggest weight to QEP Resources Inc (NYSE:QEP), around 0.36% of its 13F portfolio. Centenus Global Management is also relatively very bullish on the stock, dishing out 0.29 percent of its 13F equity portfolio to QEP.
As industrywide interest jumped, key money managers were leading the bulls' herd. Alyeska Investment Group, managed by Anand Parekh, initiated the most outsized position in QEP Resources Inc (NYSE:QEP). Alyeska Investment Group had $8.3 million invested in the company at the end of the quarter. Cliff Asness's AQR Capital Management also made a $5.8 million investment in the stock during the quarter. The other funds with brand new QEP positions are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Michael Gelband's ExodusPoint Capital, and David Rosen's Rubric Capital Management.
Let's check out hedge fund activity in other stocks similar to QEP Resources Inc (NYSE:QEP). These stocks are Upland Software Inc (NASDAQ:UPLD), TherapeuticsMD Inc (NASDAQ:TXMD), Signet Jewelers Limited (NYSE:SIG), and DHT Holdings Inc (NYSE:DHT). This group of stocks' market valuations are similar to QEP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UPLD,26,185976,2 TXMD,8,28322,0 SIG,14,135975,-3 DHT,23,128089,7 Average,17.75,119591,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $120 million. That figure was $155 million in QEP's case. Upland Software Inc (NASDAQ:UPLD) is the most popular stock in this table. On the other hand TherapeuticsMD Inc (NASDAQ:TXMD) is the least popular one with only 8 bullish hedge fund positions. QEP Resources Inc (NYSE:QEP) 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 QEP wasn't nearly as popular as these 20 stocks and hedge funds that were betting on QEP were disappointed as the stock returned -11.1% 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.