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Were Hedge Funds Right About Warming Up To Schlumberger Limited (SLB)?

Asma UL Husna

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 752 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article we look at what those investors think of Schlumberger Limited. (NYSE:SLB).

Schlumberger Limited. (NYSE:SLB) investors should be aware of an increase in hedge fund sentiment recently. Our calculations also showed that SLB isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings, 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

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

[caption id="attachment_25251" align="aligncenter" width="450"] George Soros of Soros Fund Management[/caption]

George Soros of Soros Fund Management

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. Let's take a gander at the fresh hedge fund action surrounding Schlumberger Limited. (NYSE:SLB).

What have hedge funds been doing with Schlumberger Limited. (NYSE:SLB)?

At Q3's end, a total of 49 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. On the other hand, there were a total of 55 hedge funds with a bullish position in SLB a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

SLB_nov2019

More specifically, Fisher Asset Management was the largest shareholder of Schlumberger Limited. (NYSE:SLB), with a stake worth $420.1 million reported as of the end of September. Trailing Fisher Asset Management was International Value Advisers, which amassed a stake valued at $178.8 million. D E Shaw, Orbis Investment Management, and Ariel Investments 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 GeoSphere Capital Management allocated the biggest weight to Schlumberger Limited. (NYSE:SLB), around 9.42% of its portfolio. International Value Advisers is also relatively very bullish on the stock, designating 6.62 percent of its 13F equity portfolio to SLB.

Now, specific money managers have jumped into Schlumberger Limited. (NYSE:SLB) headfirst. Pzena Investment Management, managed by Richard S. Pzena, initiated the largest position in Schlumberger Limited. (NYSE:SLB). Pzena Investment Management had $30.8 million invested in the company at the end of the quarter. Benjamin A. Smith's Laurion Capital Management also initiated a $12.6 million position during the quarter. The other funds with new positions in the stock are Javier Velazquez's Albar Capital, Till Bechtolsheimer's Arosa Capital Management, and George Soros's Soros Fund Management.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Schlumberger Limited. (NYSE:SLB) but similarly valued. These stocks are Bank of Montreal (NYSE:BMO), Exelon Corporation (NASDAQ:EXC), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), and Kinder Morgan Inc (NYSE:KMI). This group of stocks' market caps match SLB's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BMO,14,393078,1 EXC,34,2029376,2 SMFG,10,553308,-4 KMI,33,1467589,-4 Average,22.75,1110838,-1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $1111 million. That figure was $1247 million in SLB's case. Exelon Corporation (NASDAQ:EXC) is the most popular stock in this table. On the other hand Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Schlumberger Limited. (NYSE:SLB) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Hedge funds were also right about betting on SLB, though not to the same extent, as the stock returned 7.1% during the fourth quarter (through 11/22) and outperformed the market as well.

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

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