Royal Dutch Shell plc (ADR) (RDS): Are Hedge Funds Right About This Stock?

Due to the fact that Royal Dutch Shell plc (ADR) (NYSE:RDS) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there is a sect of money managers that slashed their full holdings during the third quarter. At the top of the heap, First Eagle Investment Management cut the biggest stake of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $117.4 million in call options. Neil Chriss’ fund, Hutchin Hill Capital, also cut its call options, about $110.4 million worth.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Royal Dutch Shell plc (ADR) (NYSE:RDS) but similarly valued. We will take a look at Chevron Corporation (NYSE:CVX), Alibaba Group Holding Ltd (NYSE:BABA), Novartis AG (ADR) (NYSE:NVS), and The Coca-Cola Company (NYSE:KO). This group of stocks’ market valuations resemble RDS’s market valuation.

As you can see these stocks had an average of 59 investors holding shares at the end of September and the average amount invested in these stocks was $7.75 billion. That figure was $955 million in RDS’s case. Alibaba Group Holding Ltd (NYSE:BABA) is the most popular stock in this table. On the other hand Novartis AG (ADR) (NYSE:NVS) is the least popular one with only 26 bullish hedge fund positions. Royal Dutch Shell plc (ADR) (NYSE:RDS) 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, Alibaba Group Holding Ltd (NYSE:BABA) might be a better candidate to consider a long position.