In this article you are going to find out whether hedge funds think Chesapeake Energy Corporation (NYSE:CHK) 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.
Chesapeake Energy Corporation (NYSE:CHK) investors should be aware of an increase in hedge fund sentiment lately. Chesapeake Energy Corporation (NYSE:CHK) was in 44 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 43. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CHK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Howard Marks of Oaktree Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now we’re going to take a glance at the new hedge fund action regarding Chesapeake Energy Corporation (NYSE:CHK).
Do Hedge Funds Think CHK Is A Good Stock To Buy Now?
At third quarter’s end, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 2% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CHK over the last 25 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Among these funds, Oaktree Capital Management held the most valuable stake in Chesapeake Energy Corporation (NYSE:CHK), which was worth $735.3 million at the end of the third quarter. On the second spot was D E Shaw which amassed $343.1 million worth of shares. Glendon Capital Management, Slate Path Capital, and Adage Capital Management 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 Alta Fundamental Advisers allocated the biggest weight to Chesapeake Energy Corporation (NYSE:CHK), around 14.48% of its 13F portfolio. Glendon Capital Management is also relatively very bullish on the stock, designating 10.96 percent of its 13F equity portfolio to CHK.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Oaktree Capital Management, managed by Howard Marks, assembled the biggest call position in Chesapeake Energy Corporation (NYSE:CHK). Oaktree Capital Management had $76.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $28.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Andrew Weiss’s Weiss Asset Management, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, and Michael Gelband’s ExodusPoint Capital.
Let’s also examine hedge fund activity in other stocks similar to Chesapeake Energy Corporation (NYSE:CHK). These stocks are Landstar System, Inc. (NASDAQ:LSTR), Ardagh Group S.A. (NYSE:ARD), Blueprint Medicines Corporation (NASDAQ:BPMC), Grupo Aeroportuario del Pacifico (NYSE:PAC), Ardagh Metal Packaging S.A. (NYSE:AMBP), MDU Resources Group Inc (NYSE:MDU), and MGM Growth Properties LLC (NYSE:MGP). This group of stocks’ market valuations are similar to CHK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LSTR | 25 | 256357 | 9 |
| ARD | 14 | 154999 | 1 |
| BPMC | 34 | 910776 | -2 |
| PAC | 3 | 88302 | -4 |
| AMBP | 27 | 400201 | 27 |
| MDU | 20 | 141838 | -1 |
| MGP | 27 | 536809 | -2 |
| Average | 21.4 | 355612 | 4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.4 hedge funds with bullish positions and the average amount invested in these stocks was $356 million. That figure was $2175 million in CHK’s case. Blueprint Medicines Corporation (NASDAQ:BPMC) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Pacifico (NYSE:PAC) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Chesapeake Energy Corporation (NYSE:CHK) is more popular among hedge funds. Our overall hedge fund sentiment score for CHK is 86. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately CHK wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CHK were disappointed as the stock returned -2.6% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Chesapeake Energy Corp (NYSE:CHK)
Follow Chesapeake Energy Corp (NYSE:CHK)
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Disclosure: None. This article was originally published at Insider Monkey.
