Hedge Funds Never Been Less Bullish On Chevron Corporation (CVX)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Chevron Corporation (NYSE:CVX)?

Is Chevron Corporation (NYSE:CVX) worth your attention right now? Hedge funds were becoming less hopeful. The number of long hedge fund positions went down by 9 recently. Chevron Corporation (NYSE:CVX) was in 41 hedge funds’ portfolios at the end of March. The all time high for this statistic is 56. Our calculations also showed that CVX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 50 hedge funds in our database with CVX positions at the end of the fourth quarter.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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. Now let’s take a peek at the new hedge fund action surrounding Chevron Corporation (NYSE:CVX).

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

Heading into the second quarter of 2021, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CVX over the last 23 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

The largest stake in Chevron Corporation (NYSE:CVX) was held by Berkshire Hathaway, which reported holding $2480.6 million worth of stock at the end of December. It was followed by Fisher Asset Management with a $610.7 million position. Other investors bullish on the company included GQG Partners, Diamond Hill Capital, and D E Shaw. In terms of the portfolio weights assigned to each position Stamos Capital allocated the biggest weight to Chevron Corporation (NYSE:CVX), around 4.76% of its 13F portfolio. Levin Easterly Partners is also relatively very bullish on the stock, earmarking 2.47 percent of its 13F equity portfolio to CVX.

Since Chevron Corporation (NYSE:CVX) has experienced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds who were dropping their entire stakes last quarter. It’s worth mentioning that John Overdeck and David Siegel’s Two Sigma Advisors sold off the biggest investment of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $89.8 million in stock. Till Bechtolsheimer’s fund, Arosa Capital Management, also dropped its stock, about $10.6 million worth. These transactions are interesting, as total hedge fund interest fell by 9 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Chevron Corporation (NYSE:CVX). We will take a look at PepsiCo, Inc. (NASDAQ:PEP), salesforce.com, inc. (NYSE:CRM), Merck & Co., Inc. (NYSE:MRK), Novartis AG (NYSE:NVS), AbbVie Inc (NYSE:ABBV), Broadcom Inc (NASDAQ:AVGO), and Accenture Plc (NYSE:ACN). This group of stocks’ market caps are closest to CVX’s market cap.

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As you can see these stocks had an average of 60.4 hedge funds with bullish positions and the average amount invested in these stocks was $4786 million. That figure was $4867 million in CVX’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand Novartis AG (NYSE:NVS) is the least popular one with only 19 bullish hedge fund positions. Chevron Corporation (NYSE:CVX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CVX is 33.2. 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. 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 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 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately CVX wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CVX investors were disappointed as the stock returned -0.5% since the end of March (through 6/18) 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 in 2021.

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