Did Hedge Funds Drop The Ball On Crescent Point Energy Corp (CPG) ?

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by 4 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Crescent Point Energy Corp (NYSE:CPG) from the perspective of those elite funds.

Crescent Point Energy Corp (NYSE:CPG) was in 12 hedge funds’ portfolios at the end of June. CPG has seen a decrease in enthusiasm from smart money lately. There were 17 hedge funds in our database with CPG positions at the end of the previous quarter. Our calculations also showed that CPG isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Blair Levinsky of Waratah Capital Advisors

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a peek at the recent hedge fund action encompassing Crescent Point Energy Corp (NYSE:CPG).

Hedge fund activity in Crescent Point Energy Corp (NYSE:CPG)

At Q2’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in CPG over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with CPG Positions

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Waratah Capital Advisors, managed by Brad Dunkley and Blair Levinsky, holds the largest position in Crescent Point Energy Corp (NYSE:CPG). Waratah Capital Advisors has a $13.2 million position in the stock, comprising 1.5% of its 13F portfolio. The second largest stake is Renaissance Technologies, with a $9.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group.

Seeing as Crescent Point Energy Corp (NYSE:CPG) has witnessed falling interest from the smart money, it’s safe to say that there lies a certain “tier” of fund managers who sold off their positions entirely last quarter. At the top of the heap, Steve Cohen’s Point72 Asset Management dumped the largest stake of all the hedgies followed by Insider Monkey, valued at an estimated $5 million in stock, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt. was right behind this move, as the fund dumped about $0.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 5 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Crescent Point Energy Corp (NYSE:CPG). These stocks are Oasis Petroleum Inc. (NYSE:OAS), Moelis & Company (NYSE:MC), Enanta Pharmaceuticals Inc (NASDAQ:ENTA), and Calavo Growers, Inc. (NASDAQ:CVGW). All of these stocks’ market caps are similar to CPG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OAS 21 295575 -6
MC 13 61723 -10
ENTA 20 229372 0
CVGW 15 46470 3
Average 17.25 158285 -3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $158 million. That figure was $65 million in CPG’s case. Oasis Petroleum Inc. (NYSE:OAS) is the most popular stock in this table. On the other hand Moelis & Company (NYSE:MC) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Crescent Point Energy Corp (NYSE:CPG) is even less popular than MC. Hedge funds clearly dropped the ball on CPG as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on CPG as the stock returned 29.3% during the third quarter and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.