Is Hess Corporation (HES) Going to Burn These Hedge Funds?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Hess Corporation (NYSE:HES) changed recently.

Hess Corporation (NYSE:HES) shareholders have witnessed a decrease in support from the world’s most elite money managers in recent months. Hess Corporation (NYSE:HES) was in 26 hedge funds’ portfolios at the end of March. The all time high for this statistic is 41. Our calculations also showed that HES isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

If you’d ask most traders, hedge funds are perceived as unimportant, old investment tools of years past. While there are more than 8000 funds in operation at present, Our researchers choose to focus on the moguls of this group, about 850 funds. These hedge fund managers administer the lion’s share of the smart money’s total asset base, and by tracking their matchless stock picks, Insider Monkey has uncovered a few investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Bruce Kovner, Caxton Associates LP

Bruce Kovner of Caxton Associates LP

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s go over the fresh hedge fund action regarding Hess Corporation (NYSE:HES).

Do Hedge Funds Think HES Is A Good Stock To Buy Now?

At first quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from one quarter earlier. On the other hand, there were a total of 28 hedge funds with a bullish position in HES 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.

According to Insider Monkey’s hedge fund database, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in Hess Corporation (NYSE:HES). Fisher Asset Management has a $235.3 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $73.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish include Bruce Kovner’s Caxton Associates LP, Dmitry Balyasny’s Balyasny Asset Management and Robert Bishop’s Impala Asset Management. In terms of the portfolio weights assigned to each position Caxton Associates LP allocated the biggest weight to Hess Corporation (NYSE:HES), around 4.24% of its 13F portfolio. Game Creek Capital is also relatively very bullish on the stock, setting aside 3.18 percent of its 13F equity portfolio to HES.

Seeing as Hess Corporation (NYSE:HES) has experienced bearish sentiment from the smart money, it’s safe to say that there were a few money managers that slashed their entire stakes heading into Q2. Intriguingly, Brandon Haley’s Holocene Advisors cut the largest investment of all the hedgies watched by Insider Monkey, comprising about $27.3 million in stock, and Matt Smith’s Deep Basin Capital was right behind this move, as the fund cut about $13.7 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 7 funds heading into Q2.

Let’s check out hedge fund activity in other stocks similar to Hess Corporation (NYSE:HES). These stocks are Cloudflare, Inc. (NYSE:NET), Fresenius Medical Care AG & Co. KGaA (NYSE:FMS), CarMax Inc (NYSE:KMX), Kellogg Company (NYSE:K), Futu Holdings Limited (NASDAQ:FUTU), Genmab A/S (NASDAQ:GMAB), and Church & Dwight Co., Inc. (NYSE:CHD). This group of stocks’ market caps are closest to HES’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NET 45 792469 -15
FMS 12 10933 3
KMX 46 2030896 0
K 32 557204 -5
FUTU 26 1014997 9
GMAB 13 113947 -3
CHD 27 1136541 -11
Average 28.7 808141 -3.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.7 hedge funds with bullish positions and the average amount invested in these stocks was $808 million. That figure was $556 million in HES’s case. CarMax Inc (NYSE:KMX) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. KGaA (NYSE:FMS) is the least popular one with only 12 bullish hedge fund positions. Hess Corporation (NYSE:HES) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HES is 37.6. 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 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. A small number of hedge funds were also right about betting on HES as the stock returned 19.1% since the end of the first quarter (through 7/9) and outperformed the market by an even larger margin.

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