Is It Time To Buy BP plc (ADR) (BP)?

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 BP plc (ADR) (NYSE:BP).

BP plc (ADR) (NYSE:BP) investors should pay attention to a decrease in support from the world’s most elite money managers lately. BP was in 30 hedge funds’ portfolios at the end of the third quarter of 2016. There were 40 hedge funds in our database with BP holdings at the end of the previous quarter. 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 Sanofi SA (ADR) (NYSE:SNY), Kraft Heinz Co (NASDAQ:KHC), and NTT Docomo Inc (ADR) (NYSE:DCM) to gather more data points.

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What does the smart money think about BP plc (ADR) (NYSE:BP)?

At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 25% from one quarter earlier, hitting a yearly low in hedge fund ownership. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in BP plc (ADR) (NYSE:BP). According to regulatory filings, the fund has a $434.3 million position in the stock, comprising 1.4% of its 13F portfolio. The second most bullish fund manager is Richard S. Pzena of Pzena Investment Management, with a $261.8 million position; 1.6% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish include Israel Englander’s Millennium Management, Irving Kahn’s Kahn Brothers, and Ken Griffin’s Citadel Investment Group.

Due to the fact that BP plc (ADR) (NYSE:BP) has experienced falling interest from the entirety of the hedge funds we track, we can see that there were a few money managers that decided to sell off their entire stakes last quarter. Interestingly, Jonathon Jacobson’s Highfields Capital Management sold off the biggest stake of all the hedgies followed by Insider Monkey, comprising an estimated $88.8 million in stock, and Alan Fournier’s Pennant Capital Management was right behind this move, as the fund said goodbye to about $71 million worth of BP shares. These transactions are interesting, as aggregate hedge fund interest fell by 10 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to BP plc (ADR) (NYSE:BP). We will take a look at Sanofi SA (ADR) (NYSE:SNY), Kraft Heinz Co (NASDAQ:KHC), NTT Docomo Inc (ADR) (NYSE:DCM), and 3M Co (NYSE:MMM). This group of stocks’ market valuations are similar to BP’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SNY 30 716205 -2
KHC 52 31239057 -8
DCM 6 91843 -2
MMM 40 539304 3

As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $8.15 billion. That figure was just $1.06 billion in BP’s case. Kraft Heinz Co (NASDAQ:KHC) is the most popular stock in this table. On the other hand NTT Docomo Inc (ADR) (NYSE:DCM) is the least popular one with only 6 bullish hedge fund positions. BP plc (ADR) (NYSE:BP) 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 have a lot of money invested in. In this regard KHC might be a better candidate to consider for a long position.

Disclosure: None