Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Continental Resources, Inc. (NYSE:CLR).
Is Continental Resources, Inc. (NYSE:CLR) a bargain? Hedge funds are taking a bullish view. The number of bullish hedge fund positions moved up by 3 recently. Our calculations also showed that CLR isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most market participants, hedge funds are seen as slow, old investment vehicles of yesteryear. While there are over 8000 funds with their doors open today, Our researchers choose to focus on the bigwigs of this club, approximately 750 funds. These hedge fund managers direct bulk of all hedge funds’ total asset base, and by shadowing their first-class picks, Insider Monkey has figured out several investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike this former hedge fund manager who is convinced Dow will soar past 40000 in a year or two, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to view the latest hedge fund action regarding Continental Resources, Inc. (NYSE:CLR).
How are hedge funds trading Continental Resources, Inc. (NYSE:CLR)?
At Q2’s end, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CLR over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Continental Resources, Inc. (NYSE:CLR) was held by D E Shaw, which reported holding $141.2 million worth of stock at the end of March. It was followed by Millennium Management with a $76.8 million position. Other investors bullish on the company included Deep Basin Capital, Two Sigma Advisors, and Renaissance Technologies.
As one would reasonably expect, key hedge funds have jumped into Continental Resources, Inc. (NYSE:CLR) headfirst. Caxton Associates LP, managed by Bruce Kovner, assembled the biggest call position in Continental Resources, Inc. (NYSE:CLR). Caxton Associates LP had $17.7 million invested in the company at the end of the quarter. Till Bechtolsheimer’s Arosa Capital Management also initiated a $17.3 million position during the quarter. The other funds with new positions in the stock are Joe Huber’s Huber Capital Management, Bruce Kovner’s Caxton Associates LP, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Continental Resources, Inc. (NYSE:CLR). We will take a look at ZTO Express (Cayman) Inc. (NYSE:ZTO), iQIYI, Inc. (NASDAQ:IQ), Magna International Inc. (NYSE:MGA), and Markel Corporation (NYSE:MKL). This group of stocks’ market values are similar to CLR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ZTO | 15 | 325627 | -1 |
| IQ | 22 | 901265 | 0 |
| MGA | 14 | 257637 | -13 |
| MKL | 25 | 1300425 | 2 |
| Average | 19 | 696239 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $696 million. That figure was $494 million in CLR’s case. Markel Corporation (NYSE:MKL) is the most popular stock in this table. On the other hand Magna International Inc. (NYSE:MGA) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Continental Resources, Inc. (NYSE:CLR) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CLR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CLR were disappointed as the stock returned -26.8% during the third quarter 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 many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
