A market correction in the third quarter, spurred by a number of global macroeconomic concerns ended up having a negative impact on the markets and many hedge funds as a result. The stocks of smaller companies were especially hard hit during this time as investors fled to investments seen as being safer. This is evident in the fact that the Russell 2000 ETF underperformed the S&P 500 ETF by 14 percentage points between June 25 and the end of October. We also received indications that hedge funds were trimming their positions amid the market volatility and uncertainty, and given their greater inclination towards smaller cap stocks than other investors, it follows that a stronger sell-off occurred in those stocks. Let’s study the hedge fund sentiment to see how those concerns affected their ownership of Canadian Natural Resource Ltd (USA) (NYSE:CNQ) during the quarter.
Is Canadian Natural Resource Ltd (USA) (NYSE:CNQ) the right investment to pursue these days? Hedge funds are in a bullish mood. The number of bullish hedge fund positions advanced by five in recent months. At the end of this article, we will also compare Canadian Natural Resource Ltd (USA) (NYSE:CNQ) to other stocks including Electronic Arts Inc. (NASDAQ:EA), Corning Incorporated (NYSE:GLW), and Energy Transfer Partners LP (NYSE:ETP) to get a better sense of its popularity.
To the average investor there are many metrics investors use to value stocks. Two of the most innovative metrics are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can trounce the S&P 500 by a significant margin (see the details here).
Now, let’s go over the new action encompassing Canadian Natural Resource Ltd (USA) (NYSE:CNQ).
Hedge fund activity in Canadian Natural Resource Ltd (USA) (NYSE:CNQ)
Heading into Q4, a total of 28 of the hedge funds tracked by Insider Monkey were long in this stock, an increase of 22% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Bruce Berkowitz’s mutual fund, Fairholme (FAIRX), has the biggest position in Canadian Natural Resource Ltd (USA) (NYSE:CNQ), worth close to $188.9 million, accounting for 5.4% of its total 13F portfolio. Coming in second is First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, which holds a $73.5 million position; 0.6% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions comprise Daniel Bubis’ Tetrem Capital Management, David Winters’ Wintergreen Advisers, and Renaissance Technologies.
As industrywide interest jumped, key money managers were breaking ground themselves. Fairholme (FAIRX) initiated the most valuable position in Canadian Natural Resource Ltd (USA) (NYSE:CNQ). Fairholme (FAIRX) had $188.9 million invested in the company at the end of the quarter. Jorge Paulo Lemann’s 3G Capital also made a $19.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Jonathon Jacobson’s Highfields Capital Management, Neil Chriss’ Hutchin Hill Capital, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Canadian Natural Resource Ltd (USA) (NYSE:CNQ) but similarly valued. We will take a look at Electronic Arts Inc. (NASDAQ:EA), Corning Incorporated (NYSE:GLW), Energy Transfer Partners LP (NYSE:ETP), and Nomura Holdings, Inc. (ADR) (NYSE:NMR). All of these stocks’ market caps are closest to Canadian Natural Resource Ltd (USA) (NYSE:CNQ)’s market cap.
|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 29 hedge funds with bullish positions and the average amount invested in these stocks was $954 million. That figure was $989 million in Canadian Natural Resource Ltd (USA) (NYSE:CNQ)’s case. Electronic Arts Inc. (NASDAQ:EA) is the most popular stock in this table. On the other hand, Nomura Holdings, Inc. (ADR) (NYSE:NMR) is the least popular one with only eight bullish hedge fund positions. Canadian Natural Resource Ltd (USA) (NYSE:CNQ) 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 Electronic Arts Inc. (NASDAQ:EA) might be a better candidate to consider a long position in.