Hedge Funds Are Dumping Continental Resources, Inc. (CLR)

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Continental Resources, Inc. (NYSE:CLR)? The smart money sentiment can provide an answer to this question.

Continental Resources, Inc. (NYSE:CLR) was in 23 hedge funds’ portfolios at the end of March. The all time high for this statistic is 50. CLR has seen a decrease in hedge fund interest recently. There were 29 hedge funds in our database with CLR holdings at the end of December. Our calculations also showed that CLR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

If you’d ask most market participants, hedge funds are seen as underperforming, old investment vehicles of the past. While there are over 8000 funds with their doors open at present, Our experts choose to focus on the top tier of this club, around 850 funds. These investment experts shepherd bulk of the hedge fund industry’s total asset base, and by keeping track of their matchless picks, Insider Monkey has revealed a few investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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 take a look at the latest hedge fund action encompassing Continental Resources, Inc. (NYSE:CLR).

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

At Q1’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CLR over the last 23 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.

Among these funds, Arrowstreet Capital held the most valuable stake in Continental Resources, Inc. (NYSE:CLR), which was worth $28 million at the end of the fourth quarter. On the second spot was Point72 Asset Management which amassed $22.6 million worth of shares. Millennium Management, Two Sigma Advisors, and D E Shaw 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 Arctis Global allocated the biggest weight to Continental Resources, Inc. (NYSE:CLR), around 0.98% of its 13F portfolio. Birchview Capital is also relatively very bullish on the stock, designating 0.59 percent of its 13F equity portfolio to CLR.

Due to the fact that Continental Resources, Inc. (NYSE:CLR) has experienced a decline in interest from the aggregate hedge fund industry, we can see that there was a specific group of hedge funds who sold off their entire stakes last quarter. Interestingly, Robert Bishop’s Impala Asset Management dropped the biggest investment of all the hedgies monitored by Insider Monkey, valued at about $8.6 million in stock. William Harnisch’s fund, Peconic Partners LLC, also sold off its stock, about $5.7 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 6 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Continental Resources, Inc. (NYSE:CLR) but similarly valued. These stocks are NiSource Inc. (NYSE:NI), Kohl’s Corporation (NYSE:KSS), Appian Corporation (NASDAQ:APPN), First Horizon Corporation (NYSE:FHN), AptarGroup, Inc. (NYSE:ATR), Deckers Outdoor Corp (NYSE:DECK), and Jazz Pharmaceuticals Plc (NASDAQ:JAZZ). This group of stocks’ market values are similar to CLR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NI 28 268051 5
KSS 35 1417821 -5
APPN 24 914428 0
FHN 27 312101 -3
ATR 20 259991 0
DECK 40 922422 -5
JAZZ 37 1260492 8
Average 30.1 765044 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.1 hedge funds with bullish positions and the average amount invested in these stocks was $765 million. That figure was $154 million in CLR’s case. Deckers Outdoor Corp (NYSE:DECK) is the most popular stock in this table. On the other hand AptarGroup, Inc. (NYSE:ATR) is the least popular one with only 20 bullish hedge fund positions. Continental Resources, Inc. (NYSE:CLR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CLR is 20.3. 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 CLR as the stock returned 30.8% since the end of the first quarter (through 7/16) and outperformed the market by an even larger margin.

Follow Continental Resources Inc (NYSE:CLR)

Suggested Articles:

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