Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the third quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Concho Resources Inc. (NYSE:CXO) based on that data.
Concho Resources Inc. (NYSE:CXO) was in 45 hedge funds’ portfolios at the end of September. CXO has experienced a decrease in activity from the world’s largest hedge funds recently. There were 46 hedge funds in our database with CXO holdings at the end of the previous quarter. At the end of this article we will also compare CXO to other stocks including Stericycle Inc (NASDAQ:SRCL), Cameron International Corporation (NYSE:CAM), and Entergy Corporation (NYSE:ETR) to get a better sense of its popularity.
In the eyes of most market participants, hedge funds are perceived as slow, outdated financial tools of years past. While there are greater than 8,000 funds with their doors open today, experts at hedge fund tracking site Insider Monkey hone in on the masters of this club, about 700 funds. These hedge fund managers handle the lion’s share of the hedge fund industry’s total capital, and by shadowing their finest stock picks, Insider Monkey has brought to light a number of investment strategies that have historically outrun Mr. Market. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per annum for a decade in its back tests.
With all of this in mind, we’re going to view the new action encompassing Concho Resources Inc. (NYSE:CXO).
What have hedge funds been doing with Concho Resources Inc. (NYSE:CXO)?
At Q3’s end, a total of 45 of the hedge funds tracked by Insider Monkey were long in this stock, a decline of 2% from the second quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially.
When looking at the hedgies followed by Insider Monkey, Ken Griffin’s Citadel Investment Group has the biggest position in Concho Resources Inc. (NYSE:CXO), worth close to $172.3 million, comprising 0.2% of its total 13F portfolio. On Citadel Investment Group’s heels is Discovery Capital Management, managed by Rob Citrone, which also holds a $172.3 million position; 1.9% of its 13F portfolio is allocated to the stock. Other peers that are bullish consist of Steve Cohen’s Point72 Asset Management, Clint Carlson’s Carlson Capital, and Todd J. Kantor’s Encompass Capital Advisors.
Since Concho Resources Inc. (NYSE:CXO) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of funds who were dropping their entire stakes heading into Q4. It’s worth mentioning that Alec Litowitz and Ross Laser’s Magnetar Capital said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, comprising close to $158.3 million in stock. John Labanowski’s fund, Brenham Capital Management, also said goodbye to its stock, about $42.1 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by one fund heading into Q4.
Let’s also review hedge fund activity in other stocks similar to Concho Resources Inc. (NYSE:CXO). We will take a look at Stericycle Inc (NASDAQ:SRCL), Cameron International Corporation (NYSE:CAM), Entergy Corporation (NYSE:ETR), and Noble Energy, Inc. (NYSE:NBL). This group of stocks’ market valuations match CXO’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 39 hedge funds with bullish positions and the average amount invested in these stocks was $1.19 billion. The same investoirs had $803 million in CXO shares, 6.80% of its total shares. Cameron International Corporation (NYSE:CAM) is the most popular stock in this table. On the other hand Entergy Corporation (NYSE:ETR) is the least popular one with only 29 bullish hedge fund positions. Concho Resources Inc. (NYSE:CXO) 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. In this regard CAM might be a better candidate to consider a long position in.