Is QEP Resources Inc (NYSE:QEP) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
QEP Resources Inc (NYSE:QEP) was in 21 hedge funds’ portfolios at the end of September. QEP has seen a decrease in support from the world’s most elite money managers recently. There were 26 hedge funds in our database with QEP holdings at the end of the previous quarter. At the end of this article we will also compare QEP to other stocks including Valmont Industries, Inc. (NYSE:VMI), CalAtlantic Group Inc (NYSE:CAA), and Colony Financial Inc (NYSE:CLNY) to get a better sense of its popularity.
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In the eyes of most stock holders, hedge funds are perceived as slow, old financial tools of years past. While there are more than 8000 funds with their doors open at present, We look at the crème de la crème of this group, approximately 700 funds. These money managers preside over the lion’s share of all hedge funds’ total asset base, and by tracking their first-class picks, Insider Monkey has determined a number of investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Now, we’re going to review the latest action regarding QEP Resources Inc (NYSE:QEP).
What have hedge funds been doing with QEP Resources Inc (NYSE:QEP)?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Israel Englander’s Millennium Management has the most valuable position in QEP Resources Inc (NYSE:QEP), worth close to $90.9 million, comprising 0.2% of its total 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds an $75.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish contain D. E. Shaw’s D E Shaw, Ron Gutfleish’s Elm Ridge Capital and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Because QEP Resources Inc (NYSE:QEP) has witnessed bearish sentiment from hedge fund managers, logic holds that there were a few fund managers that slashed their full holdings in the third quarter. Intriguingly, Leon Cooperman’s Omega Advisors sold off the biggest position of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $77.5 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund cut about $45.7 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 5 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as QEP Resources Inc (NYSE:QEP) but similarly valued. These stocks are Valmont Industries, Inc. (NYSE:VMI), CalAtlantic Group Inc (NYSE:CAA), Colony Financial Inc (NYSE:CLNY), and Rice Energy Inc (NYSE:RICE). This group of stocks’ market values are similar to QEP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VMI | 18 | 282228 | 0 |
| CAA | 10 | 187709 | -4 |
| CLNY | 36 | 593964 | 0 |
| RICE | 23 | 485092 | -3 |
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $387 million. That figure was $341 million in QEP’s case. Colony Financial Inc (NYSE:CLNY) is the most popular stock in this table. On the other hand CalAtlantic Group Inc (NYSE:CAA) is the least popular one with only 10 bullish hedge fund positions. In comparison, QEP Resources Inc (NYSE:QEP), with 21 bullish hedge fund positions, is not the least popular stock in this group but hedge fund interest is still below average. This may imply it is not a good buying opportunity; therefore, we’d rather spend our time researching stocks that hedge funds are collectively most fond of. In this regard, CLNY might be a better candidate to consider a long position.
