In this article we will take a look at whether hedge funds think Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is PBR a good stock to buy? Prominent investors were getting more optimistic. The number of long hedge fund positions went up by 2 in recent months. Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 35. Our calculations also showed that PBR 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). There were 29 hedge funds in our database with PBR holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. With all of this in mind let’s review the key hedge fund action encompassing Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR).
Do Hedge Funds Think PBR Is A Good Stock To Buy Now?
At the end of September, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PBR over the last 21 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR), with a stake worth $295.6 million reported as of the end of September. Trailing Renaissance Technologies was Fisher Asset Management, which amassed a stake valued at $274 million. Arrowstreet Capital, Arrowstreet Capital, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Horseman Capital Management allocated the biggest weight to Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR), around 5.89% of its 13F portfolio. Oldfield Partners is also relatively very bullish on the stock, earmarking 4.2 percent of its 13F equity portfolio to PBR.
Now, key money managers were leading the bulls’ herd. Paloma Partners, managed by Donald Sussman, initiated the most outsized position in Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR). Paloma Partners had $3.1 million invested in the company at the end of the quarter. Clint Carlson’s Carlson Capital also made a $2.4 million investment in the stock during the quarter. The following funds were also among the new PBR investors: Benjamin A. Smith’s Laurion Capital Management, Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital), and Kerr Neilson’s Platinum Asset Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR) but similarly valued. We will take a look at Ferrari N.V. (NYSE:RACE), Equinor ASA (NYSE:EQNR), TAL Education Group (NYSE:TAL), Spotify Technology S.A. (NYSE:SPOT), Illumina, Inc. (NASDAQ:ILMN), Atlassian Corporation Plc (NASDAQ:TEAM), and Biogen Inc. (NASDAQ:BIIB). This group of stocks’ market values resemble PBR’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 41 hedge funds with bullish positions and the average amount invested in these stocks was $1895 million. That figure was $1007 million in PBR’s case. Biogen Inc. (NASDAQ:BIIB) is the most popular stock in this table. On the other hand Equinor ASA (NYSE:EQNR) is the least popular one with only 20 bullish hedge fund positions. Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PBR is 47.7. 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 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on PBR as the stock returned 58.6% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.