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Here is What Hedge Funds Think About Matador Resources Co (MTDR)

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 821 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 March 31st, a week after the market trough. In this article we look at what those investors think of Matador Resources Co (NYSE:MTDR).

Is Matador Resources Co (NYSE:MTDR) a superb stock to buy now? Investors who are in the know are in a bearish mood. The number of long hedge fund positions fell by 6 lately. Our calculations also showed that MTDR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). MTDR was in 17 hedge funds’ portfolios at the end of the first quarter of 2020. There were 23 hedge funds in our database with MTDR positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

SAC CAPITAL ADVISORS

Steven Cohen of Point72 Asset Management

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 interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s view the new hedge fund action encompassing Matador Resources Co (NYSE:MTDR).

How have hedgies been trading Matador Resources Co (NYSE:MTDR)?

At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -26% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in MTDR over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Cliff Asness’s AQR Capital Management has the biggest position in Matador Resources Co (NYSE:MTDR), worth close to $14.3 million, accounting for less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Todd J. Kantor of Encompass Capital Advisors, with a $10.6 million position; 1.1% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions consist of Israel Englander’s Millennium Management, D. E. Shaw’s D E Shaw and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Encompass Capital Advisors allocated the biggest weight to Matador Resources Co (NYSE:MTDR), around 1.14% of its 13F portfolio. Value Holdings LP is also relatively very bullish on the stock, designating 0.67 percent of its 13F equity portfolio to MTDR.

Because Matador Resources Co (NYSE:MTDR) has faced a decline in interest from the smart money, it’s easy to see that there is a sect of fund managers who sold off their positions entirely heading into Q4. It’s worth mentioning that Brandon Haley’s Holocene Advisors sold off the biggest stake of the 750 funds tracked by Insider Monkey, totaling about $17.9 million in stock. Ken Fisher’s fund, Fisher Asset Management, also sold off its stock, about $10.4 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 6 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Matador Resources Co (NYSE:MTDR) but similarly valued. We will take a look at CNB Financial Corporation (NASDAQ:CCNE), Carriage Services, Inc. (NYSE:CSV), Harpoon Therapeutics, Inc. (NASDAQ:HARP), and Telaria, Inc. (NYSE:TLRA). This group of stocks’ market values are similar to MTDR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CCNE 6 20463 0
CSV 11 38774 -1
HARP 11 52011 3
TLRA 15 50300 0
Average 10.75 40387 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $44 million in MTDR’s case. Telaria, Inc. (NYSE:TLRA) is the most popular stock in this table. On the other hand CNB Financial Corporation (NASDAQ:CCNE) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Matador Resources Co (NYSE:MTDR) is more popular among hedge funds. 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 returned 13.4% in 2020 through June 22nd but still managed to beat the market by 15.9 percentage points. Hedge funds were also right about betting on MTDR as the stock returned 315.5% so far in Q2 (through June 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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