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Hedge Funds Are Warming Up To Schlumberger Limited. (SLB)

In this article you are going to find out whether hedge funds think Schlumberger Limited. (NYSE:SLB) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Schlumberger Limited. (NYSE:SLB) a buy right now? The best stock pickers are getting more optimistic. The number of bullish hedge fund positions advanced by 2 lately. Our calculations also showed that SLB 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.

In the 21st century investor’s toolkit there are numerous signals investors have at their disposal to value publicly traded companies. A duo of the most innovative signals are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the best money managers can beat their index-focused peers by a significant margin (see the details here).

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. Also, Europe is set to become the world’s largest cannabis market, so we checked out this European marijuana stock pitch. 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. With all of this in mind let’s take a look at the recent hedge fund action regarding Schlumberger Limited. (NYSE:SLB).

What does smart money think about Schlumberger Limited. (NYSE:SLB)?

At Q1’s end, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SLB over the last 18 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Is SLB A Good Stock To Buy?

More specifically, Fisher Asset Management was the largest shareholder of Schlumberger Limited. (NYSE:SLB), with a stake worth $172 million reported as of the end of September. Trailing Fisher Asset Management was D E Shaw, which amassed a stake valued at $97.8 million. Renaissance Technologies, International Value Advisers, and Citadel Investment Group 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 International Value Advisers allocated the biggest weight to Schlumberger Limited. (NYSE:SLB), around 2.71% of its 13F portfolio. Meru Capital is also relatively very bullish on the stock, designating 1.38 percent of its 13F equity portfolio to SLB.

As one would reasonably expect, specific money managers were leading the bulls’ herd. Renaissance Technologies, established the most outsized position in Schlumberger Limited. (NYSE:SLB). Renaissance Technologies had $51.7 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $34.1 million position during the quarter. The following funds were also among the new SLB investors: Benjamin A. Smith’s Laurion Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Mike Masters’s Masters Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Schlumberger Limited. (NYSE:SLB) but similarly valued. These stocks are Match Group, Inc. (NASDAQ:MTCH), Fortive Corporation (NYSE:FTV), Cadence Design Systems Inc (NASDAQ:CDNS), and Valero Energy Corporation (NYSE:VLO). All of these stocks’ market caps match SLB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MTCH 38 1032869 6
FTV 35 1015089 -8
CDNS 31 1339958 -11
VLO 45 275743 -1
Average 37.25 915915 -3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.25 hedge funds with bullish positions and the average amount invested in these stocks was $916 million. That figure was $641 million in SLB’s case. Valero Energy Corporation (NYSE:VLO) is the most popular stock in this table. On the other hand Cadence Design Systems Inc (NASDAQ:CDNS) is the least popular one with only 31 bullish hedge fund positions. Compared to these stocks Schlumberger Limited. (NYSE:SLB) 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 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on SLB as the stock returned 30.3% so far in Q2 (through May 22nd) 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.