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

Is Pioneer Natural Resources (NYSE:PXD) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.

Hedge fund interest in Pioneer Natural Resources (NYSE:PXD) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare PXD to other stocks including Marriott International Inc (NYSE:MAR), Applied Materials, Inc. (NASDAQ:AMAT), and Xcel Energy Inc (NYSE:XEL) to get a better sense of its popularity.

In today’s marketplace there are several formulas market participants use to analyze their stock investments. Some of the most innovative formulas are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite money managers can trounce the broader indices by a significant margin (see the details here).

Now, let’s take a gander at the latest action surrounding Pioneer Natural Resources (NYSE:PXD).

What have hedge funds been doing with Pioneer Natural Resources (NYSE:PXD)?

At the end of the third quarter, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter. With hedgies’ capital changing hands, there exist a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, SPO Advisory Corp, managed by John H. Scully, holds the biggest position in Pioneer Natural Resources (NYSE:PXD). SPO Advisory Corp has a $887.6 million position in the stock, comprising 15% of its 13F portfolio. The second most bullish fund manager is Andreas Halvorsen of Viking Global, with a $810.5 million position; 3.1% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that hold long positions include Seth Klarman’s Baupost Group, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.

Due to the fact that Pioneer Natural Resources (NYSE:PXD) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of funds that elected to cut their full holdings in the third quarter. At the top of the heap, George Soros’s Soros Fund Management cut the largest position of the “upper crust” of funds tracked by Insider Monkey, comprising about $29.4 million in stock, and Todd J. Kantor’s Encompass Capital Advisors was right behind this move, as the fund sold off about $19.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Pioneer Natural Resources (NYSE:PXD). These stocks are Marriott International Inc (NYSE:MAR), Applied Materials, Inc. (NASDAQ:AMAT), Xcel Energy Inc (NYSE:XEL), and The Progressive Corporation (NYSE:PGR). This group of stocks’ market caps are similar to PXD’s market cap.

As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $723 million. That figure was $4236 million in PXD’s case. Applied Materials, Inc. (NASDAQ:AMAT) is the most popular stock in this table. On the other hand Xcel Energy Inc (NYSE:XEL) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Pioneer Natural Resources (NYSE:PXD) is more popular among hedge funds, which may indicate that this stock represents a good buying opportunity. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.