Do Hedge Funds Love Murphy Oil Corporation (MUR)?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Murphy Oil Corporation (NYSE:MUR).

Is Murphy Oil Corporation (NYSE:MUR) ready to rally soon? Hedge funds were becoming hopeful. The number of bullish hedge fund positions increased by 2 lately. Murphy Oil Corporation (NYSE:MUR) was in 20 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 27. Our calculations also showed that MUR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Gavin Saitowitz of Prelude Capital

Gavin Saitowitz of Prelude Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to view the key hedge fund action encompassing Murphy Oil Corporation (NYSE:MUR).

Do Hedge Funds Think MUR Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MUR over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

More specifically, Pzena Investment Management was the largest shareholder of Murphy Oil Corporation (NYSE:MUR), with a stake worth $52.4 million reported as of the end of March. Trailing Pzena Investment Management was Arrowstreet Capital, which amassed a stake valued at $19.2 million. D E Shaw, Encompass Capital Advisors, and Millennium Management 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 Encompass Capital Advisors allocated the biggest weight to Murphy Oil Corporation (NYSE:MUR), around 0.9% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, setting aside 0.48 percent of its 13F equity portfolio to MUR.

Consequently, some big names have jumped into Murphy Oil Corporation (NYSE:MUR) headfirst. Encompass Capital Advisors, managed by Todd J. Kantor, initiated the most outsized position in Murphy Oil Corporation (NYSE:MUR). Encompass Capital Advisors had $11.5 million invested in the company at the end of the quarter. Mark Coe’s Intrinsic Edge Capital also made a $7 million investment in the stock during the quarter. The following funds were also among the new MUR investors: Brandon Haley’s Holocene Advisors, Donald Sussman’s Paloma Partners, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Murphy Oil Corporation (NYSE:MUR) but similarly valued. We will take a look at First Merchants Corporation (NASDAQ:FRME), The St. Joe Company (NYSE:JOE), Callaway Golf Company (NYSE:ELY), UP Fintech Holding Limited (NASDAQ:TIGR), First Midwest Bancorp Inc (NASDAQ:FMBI), Barnes Group Inc. (NYSE:B), and Jack in the Box Inc. (NASDAQ:JACK). All of these stocks’ market caps are similar to MUR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FRME 11 135533 2
JOE 17 1178397 5
ELY 40 504141 0
TIGR 14 103231 6
FMBI 13 114585 -3
B 18 42924 6
JACK 30 302872 -4
Average 20.4 340240 1.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $340 million. That figure was $139 million in MUR’s case. Callaway Golf Company (NYSE:ELY) is the most popular stock in this table. On the other hand First Merchants Corporation (NASDAQ:FRME) is the least popular one with only 11 bullish hedge fund positions. Murphy Oil Corporation (NYSE:MUR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MUR is 44.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on MUR as the stock returned 22.6% since the end of the first quarter (through 7/16) and outperformed the market by an even larger margin.

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