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Hedge Funds Are Buying Noble Energy, Inc. (NBL)

In this article we will take a look at whether hedge funds think Noble Energy, Inc. (NYSE:NBL) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is Noble Energy, Inc. (NYSE:NBL) a healthy stock for your portfolio? The smart money is getting more optimistic. The number of bullish hedge fund positions increased by 7 in recent months. Our calculations also showed that NBL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: 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 a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Steven Cohen

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the recent hedge fund action encompassing Noble Energy, Inc. (NYSE:NBL).

Hedge fund activity in Noble Energy, Inc. (NYSE:NBL)

At Q1’s end, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the fourth quarter of 2019. On the other hand, there were a total of 24 hedge funds with a bullish position in NBL a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Is NBL A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Ken Griffin’s Citadel Investment Group has the number one position in Noble Energy, Inc. (NYSE:NBL), worth close to $101.1 million, accounting for less than 0.1%% of its total 13F portfolio. On Citadel Investment Group’s heels is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which holds a $58.6 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish include Steve Cohen’s Point72 Asset Management, D. E. Shaw’s D E Shaw and Brandon Haley’s Holocene Advisors. In terms of the portfolio weights assigned to each position SIR Capital Management allocated the biggest weight to Noble Energy, Inc. (NYSE:NBL), around 3.45% of its 13F portfolio. Centenus Global Management is also relatively very bullish on the stock, setting aside 1.34 percent of its 13F equity portfolio to NBL.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. D E Shaw, managed by D. E. Shaw, initiated the largest position in Noble Energy, Inc. (NYSE:NBL). D E Shaw had $31.3 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $26.9 million position during the quarter. The other funds with brand new NBL positions are Renaissance Technologies, Anand Parekh’s Alyeska Investment Group, and Till Bechtolsheimer’s Arosa Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Noble Energy, Inc. (NYSE:NBL) but similarly valued. These stocks are Arrowhead Pharmaceuticals Inc. (NASDAQ:ARWR), Mantech International Corp (NASDAQ:MANT), Crane Co. (NYSE:CR), and White Mountains Insurance Group Ltd (NYSE:WTM). This group of stocks’ market caps match NBL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ARWR 22 160633 -4
MANT 17 32174 -6
CR 26 197568 3
WTM 16 133496 0
Average 20.25 130968 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $131 million. That figure was $383 million in NBL’s case. Crane Co. (NYSE:CR) is the most popular stock in this table. On the other hand White Mountains Insurance Group Ltd (NYSE:WTM) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Noble Energy, Inc. (NYSE:NBL) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on NBL as the stock returned 44.9% so far in Q2 (through the end of May) 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.

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