Do Hedge Funds Love Whiting Petroleum Corporation (WLL)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Whiting Petroleum Corporation (NYSE:WLL).

Is Whiting Petroleum Corporation (NYSE:WLL) undervalued? The best stock pickers were in a bullish mood. The number of bullish hedge fund positions advanced by 3 recently. Whiting Petroleum Corporation (NYSE:WLL) was in 24 hedge funds’ portfolios at the end of June. The all time high for this statistic is 43. Our calculations also showed that WLL isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. With all of this in mind we’re going to analyze the recent hedge fund action surrounding Whiting Petroleum Corporation (NYSE:WLL).

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

At the end of the second quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WLL over the last 24 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, SIR Capital Management was the largest shareholder of Whiting Petroleum Corporation (NYSE:WLL), with a stake worth $61.9 million reported as of the end of June. Trailing SIR Capital Management was Encompass Capital Advisors, which amassed a stake valued at $45.2 million. Valueworks LLC, Glendon Capital Management, 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 Valueworks LLC allocated the biggest weight to Whiting Petroleum Corporation (NYSE:WLL), around 14% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, earmarking 9.16 percent of its 13F equity portfolio to WLL.

As aggregate interest increased, some big names were breaking ground themselves. Renaissance Technologies, initiated the biggest position in Whiting Petroleum Corporation (NYSE:WLL). Renaissance Technologies had $15.8 million invested in the company at the end of the quarter. Joe DiMenna’s ZWEIG DIMENNA PARTNERS also initiated a $13.4 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Mark Coe’s Intrinsic Edge Capital, and D. E. Shaw’s D E Shaw.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Whiting Petroleum Corporation (NYSE:WLL) but similarly valued. We will take a look at Protagonist Therapeutics, Inc. (NASDAQ:PTGX), Monro Inc (NASDAQ:MNRO), Hostess Brands, Inc. (NASDAQ:TWNK), Virtus Investment Partners Inc (NASDAQ:VRTS), B&G Foods, Inc. (NYSE:BGS), Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), and Realogy Holdings Corp (NYSE:RLGY). All of these stocks’ market caps are closest to WLL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PTGX 27 723557 7
MNRO 10 25340 -2
TWNK 32 438884 -2
VRTS 21 165409 1
BGS 10 10330 0
DCPH 23 568335 0
RLGY 18 277899 -4
Average 20.1 315679 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.1 hedge funds with bullish positions and the average amount invested in these stocks was $316 million. That figure was $283 million in WLL’s case. Hostess Brands, Inc. (NASDAQ:TWNK) is the most popular stock in this table. On the other hand Monro Inc (NASDAQ:MNRO) is the least popular one with only 10 bullish hedge fund positions. Whiting Petroleum Corporation (NYSE:WLL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WLL is 56.6. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on WLL as the stock returned 22.7% since the end of Q2 (through 10/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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