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Hedge Funds Were Selling TOTAL S.A. (TOT) Even Before Coronavirus

Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president.

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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. We at Insider Monkey have plowed through 835 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 December 31st. In this article we look at what those investors think of TOTAL S.A. (NYSE:TOT).

TOTAL S.A. (NYSE:TOT) shareholders have witnessed a decrease in enthusiasm from smart money of late. Our calculations also showed that TOT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Keeping this in mind let’s take a glance at the latest hedge fund action regarding TOTAL S.A. (NYSE:TOT).

What have hedge funds been doing with TOTAL S.A. (NYSE:TOT)?

At Q4’s end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in TOT a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the largest position in TOTAL S.A. (NYSE:TOT). Fisher Asset Management has a $1.0951 billion position in the stock, comprising 1.1% of its 13F portfolio. On Fisher Asset Management’s heels is Alyeska Investment Group, led by Anand Parekh, holding a $41.2 million position; 0.6% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish encompass Steve Cohen’s Point72 Asset Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Paul Marshall and Ian Wace’s Marshall Wace LLP. In terms of the portfolio weights assigned to each position Invenomic Capital Management allocated the biggest weight to TOTAL S.A. (NYSE:TOT), around 1.3% of its 13F portfolio. Diametric Capital is also relatively very bullish on the stock, dishing out 1.29 percent of its 13F equity portfolio to TOT.

Seeing as TOTAL S.A. (NYSE:TOT) has experienced declining sentiment from the smart money, we can see that there exists a select few hedgies that decided to sell off their full holdings in the third quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management sold off the largest position of all the hedgies monitored by Insider Monkey, comprising close to $12.8 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund dumped about $2.5 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as TOTAL S.A. (NYSE:TOT) but similarly valued. These stocks are Netflix, Inc. (NASDAQ:NFLX), BHP Group (NYSE:BHP), Novo Nordisk A/S (NYSE:NVO), and Accenture Plc (NYSE:ACN). This group of stocks’ market values are similar to TOT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NFLX 114 13080883 11
BHP 20 886421 -4
NVO 23 2935902 2
ACN 41 1208829 -4
Average 49.5 4528009 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 49.5 hedge funds with bullish positions and the average amount invested in these stocks was $4528 million. That figure was $1196 million in TOT’s case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand BHP Group (NYSE:BHP) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks TOTAL S.A. (NYSE:TOT) is even less popular than BHP. Hedge funds dodged a bullet by taking a bearish stance towards TOT. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 11.7% in 2020 through March 11th but managed to beat the market by 3.1 percentage points. Unfortunately TOT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); TOT investors were disappointed as the stock returned -36.8% 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 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in Q1.

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

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