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Hedge Funds Are Selling 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 September 30, so let’s proceed with the discussion of the hedge fund sentiment on Murphy Oil Corporation (NYSE:MUR).

Is Murphy Oil Corporation (NYSE:MUR) a buy here? The best stock pickers are getting less bullish. The number of long hedge fund bets retreated by 1 recently. Our calculations also showed that MUR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Harding

David Harding of Winton Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. We’re going to review the latest hedge fund action regarding Murphy Oil Corporation (NYSE:MUR).

How have hedgies been trading Murphy Oil Corporation (NYSE:MUR)?

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the second quarter of 2019. On the other hand, there were a total of 23 hedge funds with a bullish position in MUR a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Richard S. Pzena’s Pzena Investment Management has the number one position in Murphy Oil Corporation (NYSE:MUR), worth close to $49.1 million, comprising 0.3% of its total 13F portfolio. On Pzena Investment Management’s heels is Point72 Asset Management, managed by Steve Cohen, which holds a $25.3 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions encompass Ken Griffin’s Citadel Investment Group, David Harding’s Winton Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Pzena Investment Management allocated the biggest weight to Murphy Oil Corporation (NYSE:MUR), around 0.27% of its 13F portfolio. Point72 Asset Management is also relatively very bullish on the stock, dishing out 0.16 percent of its 13F equity portfolio to MUR.

Because Murphy Oil Corporation (NYSE:MUR) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there were a few hedgies that elected to cut their entire stakes in the third quarter. It’s worth mentioning that David E. Shaw’s D E Shaw dumped the biggest position of all the hedgies followed by Insider Monkey, comprising close to $18.7 million in stock. Vince Maddi and Shawn Brennan’s fund, SIR Capital Management, also dumped its stock, about $11.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds in the third quarter.

Let’s check out 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 New Relic Inc (NYSE:NEWR), Two Harbors Investment Corp (NYSE:TWO), LHC Group, Inc. (NASDAQ:LHCG), and Chegg Inc (NYSE:CHGG). All of these stocks’ market caps are closest to MUR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NEWR 35 518778 6
TWO 13 64248 0
LHCG 27 112140 1
CHGG 32 337398 6
Average 26.75 258141 3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $258 million. That figure was $144 million in MUR’s case. New Relic Inc (NYSE:NEWR) is the most popular stock in this table. On the other hand Two Harbors Investment Corp (NYSE:TWO) is the least popular one with only 13 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. This is a slightly negative signal and 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately MUR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MUR investors were disappointed as the stock returned 5.2% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.

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

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