We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30. In this article we look at what those investors think of Diamondback Energy Inc (NASDAQ:FANG).
Is Diamondback Energy Inc (NASDAQ:FANG) a buy, sell, or hold? Money managers are actually getting more optimistic. The number of bullish hedge fund bets that are revealed through the 13F filings rose by 1 in recent months. FANG was in 35 hedge funds’ portfolios at the end of September. There were 34 hedge funds in our database with FANG positions at the end of the previous quarter. At the end of this article we will also compare FANG to other stocks including CPFL Energia S.A. (ADR) (NYSE:CPL), Mallinckrodt PLC (NYSE:MNK), and Align Technology, Inc. (NASDAQ:ALGN) to get a better sense of its popularity.
Follow Diamondback Energy Inc. (NASDAQ:FANG)
Follow Diamondback Energy Inc. (NASDAQ:FANG)
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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How have hedgies been trading Diamondback Energy Inc (NASDAQ:FANG)?
At the end of the third quarter, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a 3% uptick from the second quarter of 2016, as hedge fund ownership of FANG remains stable. Below, you can check out the change in hedge fund sentiment towards FANG over the last 5 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Brenham Capital Management, led by John Labanowski, holds the most valuable position in Diamondback Energy Inc (NASDAQ:FANG). Brenham Capital Management has a $117.8 million position in the stock, comprising 14% of its 13F portfolio. On Brenham Capital Management’s heels is Zimmer Partners, led by Stuart J. Zimmer, holding a $94.9 million position; 2.5% of its 13F portfolio is allocated to the company. Remaining peers that are bullish encompass Israel Englander’s Millennium Management, Eric Mindich’s Eton Park Capital, and Alec Litowitz and Ross Laser’s Magnetar Capital. We should note that two of these hedge funds (Brenham Capital Management and Zimmer Partners) are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As one would reasonably expect, key money managers were leading the bulls’ herd. Eton Park Capital created the most outsized position in Diamondback Energy Inc (NASDAQ:FANG). Eton Park Capital had $80.5 million invested in the company at the end of the quarter. Clint Carlson’s Carlson Capital also made a $24 million investment in the stock during the quarter. The following funds were also among the new FANG investors: Charles Clough’s Clough Capital Partners, Ken Griffin’s Citadel Investment Group, and Stuart J. Zimmer’s Zimmer Partners.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Diamondback Energy Inc (NASDAQ:FANG) but similarly valued. These stocks are CPFL Energia S.A. (ADR) (NYSE:CPL), Mallinckrodt PLC (NYSE:MNK), Align Technology, Inc. (NASDAQ:ALGN), and National Retail Properties, Inc. (NYSE:NNN). This group of stocks’ market valuations match FANG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CPL | 5 | 12178 | 1 |
| MNK | 32 | 1444239 | 3 |
| ALGN | 37 | 589442 | 11 |
| NNN | 20 | 103292 | 1 |
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $537 million. That figure was $730 million in FANG’s case. Align Technology, Inc. (NASDAQ:ALGN) is the most popular stock in this table. On the other hand CPFL Energia S.A. (ADR) (NYSE:CPL) is the least popular one with only 5 bullish hedge fund positions. Diamondback Energy Inc (NASDAQ:FANG) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ALGN might be a better candidate to consider taking a long position in.
Disclosure: None
