Several hedge fund billionaires took advantage of the sharp declines in broader market indices during the 5 hours following Donald Trump’s election victory. In this case markets wised up pretty quickly and the selloffs turned into rallies. Information disseminates very quickly in liquid markets, however, the rate of adjustment is usually slower when it comes to much smaller and less liquid markets. By tracking the hedge fund sentiment in publicly traded US stocks Insider Monkey aims to tap into hedge funds’ wisdom without paying them an arm and a leg. Historically their stock picks in small-cap stocks proved to be the most profitable. Let’s study the hedge fund sentiment to see how recent events affected their ownership of Chevron Corporation (NYSE:CVX) during the quarter.
Chevron Corporation (NYSE:CVX) was in 53 hedge funds’ portfolios at the end of the third quarter of 2016. CVX investors should pay attention to an increase in activity from the world’s largest hedge funds lately. There were 47 hedge funds in our database with CVX positions at the end of the previous quarter. At the end of this article we will also compare CVX to other stocks including Alibaba Group Holding Ltd (NYSE:BABA), Novartis AG (ADR) (NYSE:NVS), and The Coca-Cola Company (NYSE:KO) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
How are hedge funds trading Chevron Corporation (NYSE:CVX)?
At the end of the third quarter, a total of 53 of the hedge funds tracked by Insider Monkey were long this stock, a 13% rise from the second quarter of 2016, and the third-straight quarter with a rise in hedge fund ownership of the stock. Below, you can check out the change in hedge fund sentiment towards CVX over the last 5 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Adage Capital Management, led by Phill Gross and Robert Atchinson, holds the most valuable position in Chevron Corporation (NYSE:CVX). Adage Capital Management has a $392.1 million position in the stock, comprising 1.1% of its 13F portfolio. On Adage Capital Management’s heels is Fisher Asset Management, led by Ken Fisher, which holds a $371.4 million position. Remaining peers that are bullish contain Daniel S. Och’s OZ Management and Cliff Asness’ AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
With general bullishness amongst the heavyweights, some big names have been driving this positivity. OZ Management created the most outsized call position in Chevron Corporation (NYSE:CVX). OZ Management had $307.2 million invested in the company at the end of the quarter. Eric Mindich’s Eton Park Capital also made a $205.8 million investment in the stock during the quarter. The other funds with brand new CVX positions are Ken Griffin’s Citadel Investment Group, Glenn Russell Dubin’s Highbridge Capital Management, and Kenneth Tropin’s Graham Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Chevron Corporation (NYSE:CVX) but similarly valued. We will take a look at Alibaba Group Holding Ltd (NYSE:BABA), Novartis AG (ADR) (NYSE:NVS), The Coca-Cola Company (NYSE:KO), and Oracle Corporation (NASDAQ:ORCL). This group of stocks’ market values match CVX’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 60 hedge funds with bullish positions and the average amount invested in these stocks was $8.65 billion. That figure was $2.24 billion in CVX’s case. Alibaba Group Holding Ltd (NYSE:BABA) is the most popular stock in this table. On the other hand Novartis AG (ADR) (NYSE:NVS) is the least popular one with only 26 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BABA might be a better candidate to consider taking a long position in.