At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Crescent Point Energy Corp (NYSE:CPG) at the end of the first quarter and determine whether the smart money was really smart about this stock.
Is Crescent Point Energy Corp (NYSE:CPG) a buy here? Money managers were selling. The number of long hedge fund bets shrunk by 4 in recent months. Our calculations also showed that CPG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). CPG was in 10 hedge funds’ portfolios at the end of March. There were 14 hedge funds in our database with CPG positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a peek at the latest hedge fund action encompassing Crescent Point Energy Corp (NYSE:CPG).
What have hedge funds been doing with Crescent Point Energy Corp (NYSE:CPG)?
Heading into the second quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CPG over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Crescent Point Energy Corp (NYSE:CPG), which was worth $4.6 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $2.7 million worth of shares. D E Shaw, GLG Partners, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Tudor Investment Corp allocated the biggest weight to Crescent Point Energy Corp (NYSE:CPG), around 0.02% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to CPG.
Judging by the fact that Crescent Point Energy Corp (NYSE:CPG) has experienced falling interest from hedge fund managers, we can see that there exists a select few hedge funds that elected to cut their entire stakes in the first quarter. Intriguingly, Israel Englander’s Millennium Management sold off the largest position of all the hedgies tracked by Insider Monkey, valued at an estimated $6.7 million in stock. Brad Dunkley and Blair Levinsky’s fund, Waratah Capital Advisors, also said goodbye to its stock, about $5.4 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 4 funds in the first quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Crescent Point Energy Corp (NYSE:CPG). These stocks are Green Brick Partners Inc (NASDAQ:GRBK), Cadiz Inc (NASDAQ:CDZI), Capstead Mortgage Corporation (NYSE:CMO), and Sabine Royalty Trust (NYSE:SBR). This group of stocks’ market values match CPG’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $12 million in CPG’s case. Green Brick Partners Inc (NASDAQ:GRBK) is the most popular stock in this table. On the other hand Sabine Royalty Trust (NYSE:SBR) is the least popular one with only 4 bullish hedge fund positions. Crescent Point Energy Corp (NYSE:CPG) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on CPG as the stock returned 111.9% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.