Is Pioneer Natural Resources Company (PXD) Going to Burn These Hedge Funds?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 873 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article we look at what those investors think of Pioneer Natural Resources Company (NYSE:PXD).

Pioneer Natural Resources Company (NYSE:PXD) investors should pay attention to an increase in hedge fund sentiment lately. Pioneer Natural Resources Company (NYSE:PXD) was in 45 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 74. There were 37 hedge funds in our database with PXD holdings at the end of March. Our calculations also showed that PXD isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Phill Gross Adage Capital Phillip Gross

Phillip Gross of Adage Capital

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

At second quarter’s end, a total of 45 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the previous quarter. On the other hand, there were a total of 35 hedge funds with a bullish position in PXD a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

Is PXD A Good Stock To Buy?

Among these funds, Adage Capital Management held the most valuable stake in Pioneer Natural Resources Company (NYSE:PXD), which was worth $206.9 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $101 million worth of shares. Millennium Management, Citadel Investment Group, and Holocene Advisors 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 Glaxis Capital Management allocated the biggest weight to Pioneer Natural Resources Company (NYSE:PXD), around 6.29% of its 13F portfolio. Alden Global Capital is also relatively very bullish on the stock, earmarking 4.89 percent of its 13F equity portfolio to PXD.

Now, key hedge funds were breaking ground themselves. Holocene Advisors, managed by Brandon Haley, assembled the most valuable position in Pioneer Natural Resources Company (NYSE:PXD). Holocene Advisors had $69 million invested in the company at the end of the quarter. Parvinder Thiara’s Athanor Capital also initiated a $45.4 million position during the quarter. The other funds with new positions in the stock are Joseph Samuels’s Islet Management, Charles Davidson and Joseph Jacobs’s Wexford Capital, and Scott Bessent’s Key Square Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to Pioneer Natural Resources Company (NYSE:PXD). These stocks are Parker-Hannifin Corporation (NYSE:PH), O’Reilly Automotive Inc (NASDAQ:ORLY), Marathon Petroleum Corp (NYSE:MPC), The Allstate Corporation (NYSE:ALL), Fortinet Inc (NASDAQ:FTNT), Paychex, Inc. (NASDAQ:PAYX), and Rocket Companies, Inc. (NYSE:RKT). All of these stocks’ market caps resemble PXD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PH 42 1446066 -1
ORLY 44 2366019 -1
MPC 48 2616162 2
ALL 33 923765 -8
FTNT 32 850545 9
PAYX 29 940182 4
RKT 13 115980 -8
Average 34.4 1322674 -0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.4 hedge funds with bullish positions and the average amount invested in these stocks was $1323 million. That figure was $876 million in PXD’s case. Marathon Petroleum Corp (NYSE:MPC) is the most popular stock in this table. On the other hand Rocket Companies, Inc. (NYSE:RKT) is the least popular one with only 13 bullish hedge fund positions. Pioneer Natural Resources Company (NYSE:PXD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PXD is 74. 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 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on PXD as the stock returned 9% since the end of Q2 (through 10/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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