The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Pioneer Natural Resources Company (NYSE:PXD) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Pioneer Natural Resources Company (NYSE:PXD) has seen a decrease in activity from the world’s largest hedge funds in recent months. Pioneer Natural Resources Company (NYSE:PXD) was in 35 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 74. There were 40 hedge funds in our database with PXD holdings at the end of March. Our calculations also showed that PXD isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 eyes of most investors, hedge funds are assumed to be worthless, old financial vehicles of years past. While there are over 8000 funds with their doors open at the moment, Our researchers look at the masters of this club, approximately 850 funds. These hedge fund managers manage the lion’s share of the hedge fund industry’s total capital, and by tailing their top picks, Insider Monkey has formulated many investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover 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 and boost precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are also checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s view the fresh hedge fund action surrounding Pioneer Natural Resources Company (NYSE:PXD).
What have hedge funds been doing with Pioneer Natural Resources Company (NYSE:PXD)?
At the end of the second quarter, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the first quarter of 2020. By comparison, 48 hedge funds held shares or bullish call options in PXD a year ago. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
The largest stake in Pioneer Natural Resources Company (NYSE:PXD) was held by Holocene Advisors, which reported holding $44.8 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $44.8 million position. Other investors bullish on the company included Millennium Management, Renaissance Technologies, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Covalis Capital allocated the biggest weight to Pioneer Natural Resources Company (NYSE:PXD), around 3.11% of its 13F portfolio. Arosa Capital Management is also relatively very bullish on the stock, setting aside 3.04 percent of its 13F equity portfolio to PXD.
Seeing as Pioneer Natural Resources Company (NYSE:PXD) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of fund managers who sold off their full holdings last quarter. At the top of the heap, Todd J. Kantor’s Encompass Capital Advisors sold off the largest position of all the hedgies monitored by Insider Monkey, totaling about $86.1 million in stock, and Gavin M. Abrams’s Abrams Bison Investments was right behind this move, as the fund sold off about $32.1 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 5 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Pioneer Natural Resources Company (NYSE:PXD). We will take a look at Bilibili Inc. (NASDAQ:BILI), Hess Corporation (NYSE:HES), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), Arista Networks Inc (NYSE:ANET), Baker Hughes Company (NYSE:BKR), Agnico Eagle Mines Limited (NYSE:AEM), and ORIX Corporation (NYSE:IX). This group of stocks’ market values match PXD’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $662 million. That figure was $341 million in PXD’s case. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 4 bullish hedge fund positions. Pioneer Natural Resources Company (NYSE:PXD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PXD is 41.4. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately PXD wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PXD were disappointed as the stock returned 6.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.