We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Chevron Corporation (NYSE:CVX) and determine whether hedge funds skillfully traded this stock.
Chevron Corporation (NYSE:CVX) has experienced an increase in hedge fund interest recently. Chevron Corporation (NYSE:CVX) was in 51 hedge funds’ portfolios at the end of September. The all time high for this statistic is 56. Our calculations also showed that CVX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to analyze the new hedge fund action surrounding Chevron Corporation (NYSE:CVX).
Clint Carlson of Carlson Capital
Do Hedge Funds Think CVX Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 51 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from the second quarter of 2021. On the other hand, there were a total of 43 hedge funds with a bullish position in CVX a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Chevron Corporation (NYSE:CVX) was held by Berkshire Hathaway, which reported holding $2912 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $634.5 million position. Other investors bullish on the company included Citadel Investment Group, Renaissance Technologies, and D E Shaw. In terms of the portfolio weights assigned to each position Solus Alternative Asset Management allocated the biggest weight to Chevron Corporation (NYSE:CVX), around 4.35% of its 13F portfolio. Stamos Capital is also relatively very bullish on the stock, setting aside 3.92 percent of its 13F equity portfolio to CVX.
Consequently, key hedge funds have jumped into Chevron Corporation (NYSE:CVX) headfirst. Two Sigma Advisors, managed by John Overdeck and David Siegel, initiated the biggest position in Chevron Corporation (NYSE:CVX). Two Sigma Advisors had $30.3 million invested in the company at the end of the quarter. Till Bechtolsheimer’s Arosa Capital Management also initiated a $10.7 million position during the quarter. The other funds with brand new CVX positions are Dmitry Balyasny’s Balyasny Asset Management, Clint Carlson’s Carlson Capital, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Let’s now review hedge fund activity in other stocks similar to Chevron Corporation (NYSE:CVX). These stocks are AT&T Inc. (NYSE:T), AbbVie Inc (NYSE:ABBV), Wells Fargo & Company (NYSE:WFC), Merck & Co., Inc. (NYSE:MRK), AstraZeneca plc (NASDAQ:AZN), Novartis AG (NYSE:NVS), and McDonald’s Corporation (NYSE:MCD). This group of stocks’ market valuations resemble CVX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| T | 66 | 3212098 | -2 |
| ABBV | 81 | 4140050 | -1 |
| WFC | 88 | 6188279 | -6 |
| MRK | 77 | 4550626 | -2 |
| AZN | 41 | 3757394 | 4 |
| NVS | 22 | 1439973 | 0 |
| MCD | 58 | 3339098 | -8 |
| Average | 61.9 | 3803931 | -2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 61.9 hedge funds with bullish positions and the average amount invested in these stocks was $3804 million. That figure was $4442 million in CVX’s case. Wells Fargo & Company (NYSE:WFC) is the most popular stock in this table. On the other hand Novartis AG (NYSE:NVS) is the least popular one with only 22 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. Our overall hedge fund sentiment score for CVX is 55.3. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on CVX as the stock returned 30.9% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
Follow Chevron Corp (NYSE:CVX)
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Disclosure: None. This article was originally published at Insider Monkey.
