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Helmerich & Payne, Inc. (HP): Hedge Funds Are Going Back and Forth

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 Helmerich & Payne, Inc. (NYSE:HP) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Helmerich & Payne, Inc. (NYSE:HP) shareholders have witnessed an increase in hedge fund interest in recent months. Helmerich & Payne, Inc. (NYSE:HP) was in 33 hedge funds’ portfolios at the end of June. The all time high for this statistics is 33. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 27 hedge funds in our database with HP positions at the end of the first quarter. Our calculations also showed that HP 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 financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Michael Burry Scion Capital

Michael Burry of Scion Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. Cannabis stocks are roaring back in 2020, which is why we are also checking out this under-the-radar stock. 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. Now let’s review the fresh hedge fund action regarding Helmerich & Payne, Inc. (NYSE:HP).

How have hedgies been trading Helmerich & Payne, Inc. (NYSE:HP)?

At the end of the second quarter, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the previous quarter. By comparison, 33 hedge funds held shares or bullish call options in HP a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Two Sigma Advisors was the largest shareholder of Helmerich & Payne, Inc. (NYSE:HP), with a stake worth $23.3 million reported as of the end of September. Trailing Two Sigma Advisors was Fisher Asset Management, which amassed a stake valued at $22.2 million. Renaissance Technologies, AQR Capital Management, and Magnolia Capital Fund 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 Scion Asset Management allocated the biggest weight to Helmerich & Payne, Inc. (NYSE:HP), around 2.32% of its 13F portfolio. Magnolia Capital Fund is also relatively very bullish on the stock, dishing out 2.17 percent of its 13F equity portfolio to HP.

Now, specific money managers have jumped into Helmerich & Payne, Inc. (NYSE:HP) headfirst. Holocene Advisors, managed by Brandon Haley, initiated the most valuable position in Helmerich & Payne, Inc. (NYSE:HP). Holocene Advisors had $7.9 million invested in the company at the end of the quarter. Michael Burry’s Scion Asset Management also made a $7.3 million investment in the stock during the quarter. The following funds were also among the new HP investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Donald Sussman’s Paloma Partners, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Helmerich & Payne, Inc. (NYSE:HP) but similarly valued. These stocks are Piedmont Office Realty Trust, Inc. (NYSE:PDM), Laureate Education, Inc. (NASDAQ:LAUR), Cathay General Bancorp (NASDAQ:CATY), Cabot Corporation (NYSE:CBT), Alcoa Corporation (NYSE:AA), First Majestic Silver Corp (NYSE:AG), and The Goodyear Tire & Rubber Company (NASDAQ:GT). This group of stocks’ market caps are similar to HP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PDM 11 41417 4
LAUR 31 161065 6
CATY 11 31944 -4
CBT 18 51733 -5
AA 33 402299 0
AG 14 106404 1
GT 21 184571 -5
Average 19.9 139919 -0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.9 hedge funds with bullish positions and the average amount invested in these stocks was $140 million. That figure was $188 million in HP’s case. Alcoa Corporation (NYSE:AA) is the most popular stock in this table. On the other hand Piedmont Office Realty Trust, Inc. (NYSE:PDM) is the least popular one with only 11 bullish hedge fund positions. Helmerich & Payne, Inc. (NYSE:HP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HP is 90. 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 HP wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on HP were disappointed as the stock returned -14.4% 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.

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