After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Imperial Oil Limited (NYSE:IMO).
Is IMO a good stock to buy now? Imperial Oil Limited (NYSE:IMO) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 11 hedge funds’ portfolios at the end of September. Our calculations also showed that IMO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Anaplan, Inc. (NYSE:PLAN), ASE Technology Holding Co., Ltd. (NYSE:ASX), and RenaissanceRe Holdings Ltd. (NYSE:RNR) to gather more data points.
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 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Steven Cohen of Point72 Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let’s analyze the latest hedge fund action regarding Imperial Oil Limited (NYSE:IMO).
Do Hedge Funds Think IMO Is A Good Stock To Buy Now?
At third quarter’s end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in IMO a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Imperial Oil Limited (NYSE:IMO) was held by Renaissance Technologies, which reported holding $9.3 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $7.4 million position. Other investors bullish on the company included Point72 Asset Management, D E Shaw, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Qtron Investments allocated the biggest weight to Imperial Oil Limited (NYSE:IMO), around 0.05% of its 13F portfolio. Point72 Asset Management is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to IMO.
Because Imperial Oil Limited (NYSE:IMO) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of hedgies that decided to sell off their full holdings in the third quarter. Interestingly, Noam Gottesman’s GLG Partners dumped the largest stake of all the hedgies tracked by Insider Monkey, worth close to $1.7 million in stock, and David Andre and Astro Teller’s Cerebellum Capital was right behind this move, as the fund sold off about $1.6 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Imperial Oil Limited (NYSE:IMO). We will take a look at Anaplan, Inc. (NYSE:PLAN), ASE Technology Holding Co., Ltd. (NYSE:ASX), RenaissanceRe Holdings Ltd. (NYSE:RNR), Paylocity Holding Corp (NASDAQ:PCTY), Concho Resources Inc. (NYSE:CXO), Guidewire Software Inc (NYSE:GWRE), and GCI Liberty, Inc. (NASDAQ:GLIBA). All of these stocks’ market caps are similar to IMO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PLAN | 55 | 3198745 | 6 |
| ASX | 11 | 131886 | 0 |
| RNR | 37 | 806129 | -4 |
| PCTY | 27 | 505551 | 3 |
| CXO | 47 | 731966 | 3 |
| GWRE | 34 | 1087613 | 5 |
| GLIBA | 48 | 2311934 | -5 |
| Average | 37 | 1253403 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $1253 million. That figure was $28 million in IMO’s case. Anaplan, Inc. (NYSE:PLAN) is the most popular stock in this table. On the other hand ASE Technology Holding Co., Ltd. (NYSE:ASX) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Imperial Oil Limited (NYSE:IMO) is even less popular than ASX. Our overall hedge fund sentiment score for IMO is 22.4. 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. Hedge funds clearly dropped the ball on IMO as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on IMO as the stock returned 62.3% since Q3 (through December 8th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
