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Here is What Hedge Funds Think About Imperial Oil Limited (IMO)

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Imperial Oil Limited (NYSE:IMO).

Is Imperial Oil Limited (NYSE:IMO) an attractive investment now? The smart money is becoming less hopeful. The number of long hedge fund positions dropped by 1 lately. Our calculations also showed that IMO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 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.

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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

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. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a gander at the fresh hedge fund action surrounding Imperial Oil Limited (NYSE:IMO).

What does smart money think about Imperial Oil Limited (NYSE:IMO)?

At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards IMO over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, D E Shaw, managed by David E. Shaw, holds the most valuable position in Imperial Oil Limited (NYSE:IMO). D E Shaw has a $11.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is GLG Partners, led by Noam Gottesman, holding a $10.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish include Renaissance Technologies, Ray Dalio’s Bridgewater Associates and Peter Muller’s PDT Partners. In terms of the portfolio weights assigned to each position PDT Partners allocated the biggest weight to Imperial Oil Limited (NYSE:IMO), around 0.13% of its 13F portfolio. Qtron Investments is also relatively very bullish on the stock, earmarking 0.12 percent of its 13F equity portfolio to IMO.

Because Imperial Oil Limited (NYSE:IMO) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there exists a select few money managers that elected to cut their entire stakes by the end of the third quarter. Intriguingly, Vince Maddi and Shawn Brennan’s SIR Capital Management said goodbye to the largest investment of the “upper crust” of funds watched by Insider Monkey, valued at close to $6.3 million in stock, and Jeffrey Talpins’s Element Capital Management was right behind this move, as the fund dumped about $2.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Imperial Oil Limited (NYSE:IMO) but similarly valued. These stocks are Palo Alto Networks Inc (NYSE:PANW), Expedia Group, Inc. (NASDAQ:EXPE), Fifth Third Bancorp (NASDAQ:FITB), and Fox Corporation (NASDAQ:FOX). All of these stocks’ market caps resemble IMO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PANW 47 2862155 2
EXPE 33 2622304 0
FITB 34 1027583 5
FOX 27 849332 -3
Average 35.25 1840344 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.25 hedge funds with bullish positions and the average amount invested in these stocks was $1840 million. That figure was $43 million in IMO’s case. Palo Alto Networks Inc (NYSE:PANW) is the most popular stock in this table. On the other hand Fox Corporation (NASDAQ:FOX) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks Imperial Oil Limited (NYSE:IMO) is even less popular than FOX. Hedge funds dodged a bullet by taking a bearish stance towards IMO. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately IMO wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); IMO investors were disappointed as the stock returned -3.3% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.

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

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