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Did Hedge Funds Drop The Ball On Whiting Petroleum Corporation (WLL) ?

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Whiting Petroleum Corporation (NYSE:WLL) based on that data.

Is Whiting Petroleum Corporation (NYSE:WLL) a safe investment right now? The best stock pickers are turning less bullish. The number of long hedge fund positions shrunk by 6 recently. Our calculations also showed that wll isn’t among the 30 most popular stocks among hedge funds. WLL was in 33 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 39 hedge funds in our database with WLL holdings at the end of the previous quarter.

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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

CAPITAL GROWTH MANAGEMENT

Let’s review the latest hedge fund action regarding Whiting Petroleum Corporation (NYSE:WLL).

Hedge fund activity in Whiting Petroleum Corporation (NYSE:WLL)

Heading into the first quarter of 2019, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WLL over the last 14 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with WLL Positions

More specifically, Fine Capital Partners was the largest shareholder of Whiting Petroleum Corporation (NYSE:WLL), with a stake worth $98.4 million reported as of the end of September. Trailing Fine Capital Partners was GMT Capital, which amassed a stake valued at $42.2 million. Encompass Capital Advisors, Capital Growth Management, and Renaissance Technologies were also very fond of the stock, giving the stock large weights in their portfolios.

Because Whiting Petroleum Corporation (NYSE:WLL) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of money managers who sold off their positions entirely in the third quarter. At the top of the heap, Paul Reeder and Edward Shapiro’s PAR Capital Management cut the largest stake of all the hedgies watched by Insider Monkey, totaling an estimated $170.7 million in stock, and David Cohen and Harold Levy’s Iridian Asset Management was right behind this move, as the fund dropped about $102.3 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 6 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Whiting Petroleum Corporation (NYSE:WLL) but similarly valued. These stocks are Tenable Holdings, Inc. (NASDAQ:TENB), II-VI, Inc. (NASDAQ:IIVI), SailPoint Technologies Holdings, Inc. (NYSE:SAIL), and Main Street Capital Corporation (NYSE:MAIN). This group of stocks’ market caps match WLL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TENB 15 49207 -4
IIVI 22 139334 9
SAIL 22 167257 5
MAIN 9 11748 1
Average 17 91887 2.75

View table here if you experience formatting issues.

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 $92 million. That figure was $356 million in WLL’s case. II-VI, Inc. (NASDAQ:IIVI) is the most popular stock in this table. On the other hand Main Street Capital Corporation (NYSE:MAIN) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Whiting Petroleum Corporation (NYSE:WLL) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on WLL as the stock returned 29.4% and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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