Hedge Funds Aren’t Crazy About Noble Energy (NBL) As They Were in 2016

The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentives to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Noble Energy, Inc. (NYSE:NBL) from the perspective of those elite funds.

Noble Energy, Inc. (NYSE:NBL) has seen an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that NBL isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are numerous formulas stock market investors employ to evaluate stocks. A duo of the less known formulas are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the top money managers can outclass their index-focused peers by a solid amount (see the details here).

Dmitry Balyasny

Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the new hedge fund action encompassing Noble Energy, Inc. (NYSE:NBL).

How are hedge funds trading Noble Energy, Inc. (NYSE:NBL)?

At the end of the second quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NBL over the last 16 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).


Among these funds, Adage Capital Management held the most valuable stake in Noble Energy, Inc. (NYSE:NBL), which was worth $242.5 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $176.7 million worth of shares. Moreover, Millennium Management, Point72 Asset Management, and Balyasny Asset Management were also bullish on Noble Energy, Inc. (NYSE:NBL), allocating a large percentage of their portfolios to this stock.

Consequently, key money managers were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest position in Noble Energy, Inc. (NYSE:NBL). Balyasny Asset Management had $29.1 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $11.2 million position during the quarter. The other funds with new positions in the stock are Wayne Cooperman’s Cobalt Capital Management, and Sara Nainzadeh’s Centenus Global 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 Array Biopharma Inc (NASDAQ:ARRY), United Rentals, Inc. (NYSE:URI), Allegion plc (NYSE:ALLE), and Teva Pharmaceutical Industries Limited (NYSE:TEVA). This group of stocks’ market valuations resemble NBL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ARRY 58 3051915 26
URI 44 1043608 -1
ALLE 24 406142 3
TEVA 25 942298 -7
Average 37.75 1360991 5.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.75 hedge funds with bullish positions and the average amount invested in these stocks was $1361 million. That figure was $808 million in NBL’s case. Array Biopharma Inc (NASDAQ:ARRY) is the most popular stock in this table. On the other hand Allegion plc (NYSE:ALLE) is the least popular one with only 24 bullish hedge fund positions. Noble Energy, Inc. (NYSE:NBL) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately NBL wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NBL investors were disappointed as the stock returned 0.9% during the third 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 many of these stocks already outperformed the market so far in 2019.

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