EOG Resources Inc (EOG) vs. Hedge Fund Favorites in 2019

Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57%. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 41.1% in 2019 (through December 23rd) and outperformed the broader market benchmark by 10.1 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Is EOG Resources Inc (NYSE:EOG) a buy right now? Money managers are buying. The number of long hedge fund positions advanced by 12 in recent months. Our calculations also showed that EOG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

In the eyes of most traders, hedge funds are assumed to be slow, old investment vehicles of the past. While there are more than 8000 funds in operation today, Our researchers look at the top tier of this club, about 750 funds. Most estimates calculate that this group of people oversee most of all hedge funds’ total capital, and by keeping track of their matchless stock picks, Insider Monkey has formulated several investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now we’re going to take a glance at the recent hedge fund action regarding EOG Resources Inc (NYSE:EOG).

How are hedge funds trading EOG Resources Inc (NYSE:EOG)?

At the end of the third quarter, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards EOG over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is EOG A Good Stock To Buy?

More specifically, Two Sigma Advisors was the largest shareholder of EOG Resources Inc (NYSE:EOG), with a stake worth $256.3 million reported as of the end of September. Trailing Two Sigma Advisors was Lyrical Asset Management, which amassed a stake valued at $224 million. D E Shaw, Citadel Investment Group, 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 Southport Management allocated the biggest weight to EOG Resources Inc (NYSE:EOG), around 4.7% of its 13F portfolio. Lodge Hill Capital is also relatively very bullish on the stock, dishing out 3.85 percent of its 13F equity portfolio to EOG.

Now, key money managers were breaking ground themselves. Alyeska Investment Group, managed by Anand Parekh, established the largest position in EOG Resources Inc (NYSE:EOG). Alyeska Investment Group had $36.3 million invested in the company at the end of the quarter. Todd J. Kantor’s Encompass Capital Advisors also initiated a $33.8 million position during the quarter. The other funds with brand new EOG positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, John Murphy’s Levin Easterly Partners, and Clint Murray’s Lodge Hill Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as EOG Resources Inc (NYSE:EOG) but similarly valued. These stocks are Biogen Inc. (NASDAQ:BIIB), Public Storage (NYSE:PSA), Capital One Financial Corp. (NYSE:COF), and The Bank of New York Mellon Corporation (NYSE:BK). This group of stocks’ market caps are similar to EOG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BIIB 48 4207480 5
PSA 22 876105 2
COF 42 1936605 0
BK 50 5638516 17
Average 40.5 3164677 6

View table here if you experience formatting issues.

As you can see these stocks had an average of 40.5 hedge funds with bullish positions and the average amount invested in these stocks was $3165 million. That figure was $1450 million in EOG’s case. The Bank of New York Mellon Corporation (NYSE:BK) is the most popular stock in this table. On the other hand Public Storage (NYSE:PSA) is the least popular one with only 22 bullish hedge fund positions. EOG Resources Inc (NYSE:EOG) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately EOG wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on EOG were disappointed as the stock returned -3.3% in 2019 (through December 23rd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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