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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Cimarex Energy Co (NYSE:XEC).
Is XEC stock a buy? Cimarex Energy Co (NYSE:XEC) was in 34 hedge funds' portfolios at the end of December. The all time high for this statistic is 43. XEC has experienced a decrease in enthusiasm from smart money in recent months. There were 38 hedge funds in our database with XEC holdings at the end of September. Our calculations also showed that XEC isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
Phillip Gross of Adage Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 check out the key hedge fund action encompassing Cimarex Energy Co (NYSE:XEC).
Do Hedge Funds Think XEC Is A Good Stock To Buy Now?
At Q4's end, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the third quarter of 2020. On the other hand, there were a total of 33 hedge funds with a bullish position in XEC a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in Cimarex Energy Co (NYSE:XEC) was held by Adage Capital Management, which reported holding $106.2 million worth of stock at the end of December. It was followed by Diamond Hill Capital with a $86.2 million position. Other investors bullish on the company included Deep Basin Capital, Arrowstreet Capital, and Millennium Management. In terms of the portfolio weights assigned to each position SIR Capital Management allocated the biggest weight to Cimarex Energy Co (NYSE:XEC), around 6.74% of its 13F portfolio. Deep Basin Capital is also relatively very bullish on the stock, earmarking 5.79 percent of its 13F equity portfolio to XEC.
Seeing as Cimarex Energy Co (NYSE:XEC) has experienced a decline in interest from the smart money, it's safe to say that there were a few funds who sold off their full holdings in the fourth quarter. Intriguingly, Ken Griffin's Citadel Investment Group dumped the biggest investment of the "upper crust" of funds followed by Insider Monkey, worth an estimated $61.1 million in stock, and Todd J. Kantor's Encompass Capital Advisors was right behind this move, as the fund dropped about $54.2 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 4 funds in the fourth quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Cimarex Energy Co (NYSE:XEC) but similarly valued. We will take a look at Murphy USA Inc. (NYSE:MUSA), Rackspace Technology, Inc. (NASDAQ:RXT), Sabre Corporation (NASDAQ:SABR), Webster Financial Corporation (NYSE:WBS), Granite Real Estate Investment Trust (NYSE:GRP), Cerence Inc. (NASDAQ:CRNC), and Braskem SA (NYSE:BAK). This group of stocks' market caps are similar to XEC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MUSA,26,290376,3 RXT,14,125662,-1 SABR,46,1243878,15 WBS,26,394187,1 GRP,6,45457,0 CRNC,14,215273,2 BAK,8,10599,0 Average,20,332205,2.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $332 million. That figure was $510 million in XEC's case. Sabre Corporation (NASDAQ:SABR) is the most popular stock in this table. On the other hand Granite Real Estate Investment Trust (NYSE:GRP) is the least popular one with only 6 bullish hedge fund positions. Cimarex Energy Co (NYSE:XEC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for XEC is 59.7. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on XEC as the stock returned 72.5% since the end of Q4 (through 4/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.