Hedge Funds Are Selling YPF SA (ADR) (YPF)

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in the third quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about YPF SA (ADR) (NYSE:YPF) in this article.

Is YPF SA (ADR) a bargain? Prominent investors are becoming less confident. The number of long hedge fund bets dropped by 2 in recent months. YPF was in 32 hedge funds’ portfolios at the end of the third quarter of 2015. There were 34 hedge funds in our database with YPF holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as STMicroelectronics N.V. (ADR) (NYSE:STM), United Therapeutics Corporation (NASDAQ:UTHR), and Flextronics International Ltd. (NASDAQ:FLEX) to gather more data points.

In the eyes of most stock holders, hedge funds are assumed to be worthless, outdated financial vehicles of yesteryear. While there are more than 8000 funds trading at present, Our researchers look at the aristocrats of this group, approximately 700 funds. It is estimated that this group of investors oversee bulk of all hedge funds’ total asset base, and by tracking their top stock picks, Insider Monkey has spotted a number of investment strategies that have historically defeated the market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Now, we’re going to take a look at the fresh action surrounding YPF SA (ADR) (NYSE:YPF).

How are hedge funds trading YPF SA (ADR) (NYSE:YPF)?

At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from one quarter earlier. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Soros Fund Management, managed by George Soros, holds the most valuable position in YPF SA (ADR) (NYSE:YPF). Soros Fund Management has a $154.3 million position in the stock, comprising 2.3% of its 13F portfolio. Coming in second is Discovery Capital Management, led by Rob Citrone, holding a $78.4 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish consist of Tom Wagner and Ara Cohen’s Knighthead Capital, Jonathon Jacobson’s Highfields Capital Management and Michael Weinstock’s Monarch Alternative Capital.

Judging by the fact that YPF SA (ADR) (NYSE:YPF) has faced declining sentiment from the smart money, it’s easy to see that there is a sect of hedge funds that elected to cut their entire stakes by the end of the third quarter. Interestingly, Christopher R. Hansen’s Valiant Capital dropped the biggest position of the 700 funds followed by Insider Monkey, valued at close to $29.5 million in stock, and Carson Yost’s Yost Capital Management was right behind this move, as the fund dropped about $13.3 million worth. These moves are interesting, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks similar to YPF SA (ADR) (NYSE:YPF). These stocks are STMicroelectronics N.V. (ADR) (NYSE:STM), United Therapeutics Corporation (NASDAQ:UTHR), Flextronics International Ltd. (NASDAQ:FLEX), and Xylem Inc (NYSE:XYL). All of these stocks’ market caps are closest to YPF’s market cap.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $837 million. That figure was $634 million in YPF’s case. United Therapeutics Corporation (NASDAQ:UTHR) is the most popular stock in this table. On the other hand STMicroelectronics N.V. (ADR) (NYSE:STM) is the least popular one with only 6 bullish hedge fund positions. YPF SA (ADR) (NYSE:YPF) 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 UTHR might be a better candidate to consider a long position.