Hedge Funds Aren’t Crazy About Matador Resources Co (MTDR) Anymore

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Matador Resources Co (NYSE:MTDR) from the perspective of those elite funds.

Is Matador Resources Co (NYSE:MTDR) a buy, sell, or hold? Investors who are in the know are becoming less hopeful. The number of long hedge fund positions decreased by 3 recently. 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 Delek US Holdings, Inc. (NYSE:DK), Chimerix Inc (NASDAQ:CMRX), and Tahoe Resources Inc (NYSE:TAHO) to gather more data points.

To most market participants, hedge funds are perceived as underperforming, outdated financial tools of yesteryear. While there are over an 8000 funds in operation at present, Our researchers choose to focus on the leaders of this group, around 700 funds. These hedge fund managers manage bulk of the smart money’s total asset base, and by following their finest stock picks, Insider Monkey has discovered numerous investment strategies that have historically outpaced the broader indices. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Now, let’s check out the fresh action surrounding Matador Resources Co (NYSE:MTDR).

How have hedgies been trading Matador Resources Co (NYSE:MTDR)?

At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 23% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Matador Resources Co (NYSE:MTDR). Citadel Investment Group has a $13.5 million position in the stock, comprising less than 0.1% of its 13F portfolio. On Citadel Investment Group’s heels is D E Shaw, which holds a $11.6 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions consist of Steve Cohen’s Point72 Asset Management, Renaissance Technologies, and Sander Gerber’s Hudson Bay Capital Management.

Due to the fact that Matador Resources Co (NYSE:MTDR) has witnessed a declination in interest from the aggregate hedge fund industry, logic holds that there is a sect of hedge funds who sold off their full holdings heading into Q4. Intriguingly, Todd J. Kantor’s Encompass Capital Advisors cut the largest position of the “upper crust” of funds watched by Insider Monkey, worth close to $18.3 million in stock, and Kyle Bass’ Hayman Advisors was right behind this move, as the fund dropped about $15.8 million worth of shares. These bearish behaviors are important to note, as total hedge fund interest dropped by 3 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to Matador Resources Co (NYSE:MTDR). These stocks are Delek US Holdings, Inc. (NYSE:DK), Chimerix Inc (NASDAQ:CMRX), Tahoe Resources Inc (NYSE:TAHO), and St. Joe Company (NYSE:JOE). This group of stocks’ market values is closest to Matador Resources Co (NYSE:MTDR)’s market value.

As you can see, these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $323 million. That figure was $45 million in Matador Resources Co (NYSE:MTDR)’s case. Delek US Holdings, Inc. (NYSE:DK) is the most popular stock in this table. On the other hand, St. Joe Company (NYSE:JOE) is the least popular one with only 9 bullish hedge fund positions. Matador Resources Co (NYSE:MTDR) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Delek US Holdings, Inc. (NYSE:DK) might be a better candidate to consider a long position.