While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Exxon Mobil Corporation (NYSE:XOM).
Is XOM a good stock to buy now? Exxon Mobil Corporation (NYSE:XOM) has seen a decrease in enthusiasm from smart money of late. Exxon Mobil Corporation (NYSE:XOM) was in 52 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 68. There were 53 hedge funds in our database with XOM positions at the end of the second quarter. Our calculations also showed that XOM 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).
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.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium 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. Keeping this in mind we’re going to take a look at the latest hedge fund action surrounding Exxon Mobil Corporation (NYSE:XOM).
Hedge fund activity in Exxon Mobil Corporation (NYSE:XOM)
Heading into the fourth quarter of 2020, a total of 52 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -2% from one quarter earlier. By comparison, 55 hedge funds held shares or bullish call options in XOM a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Fisher’s Fisher Asset Management has the most valuable position in Exxon Mobil Corporation (NYSE:XOM), worth close to $252.2 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $246 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions include Phill Gross and Robert Atchinson’s Adage Capital Management, and Richard S. Pzena’s Pzena Investment Management. In terms of the portfolio weights assigned to each position Stamos Capital allocated the biggest weight to Exxon Mobil Corporation (NYSE:XOM), around 2.6% of its 13F portfolio. ZWEIG DIMENNA PARTNERS is also relatively very bullish on the stock, designating 1.49 percent of its 13F equity portfolio to XOM.
Due to the fact that Exxon Mobil Corporation (NYSE:XOM) has witnessed falling interest from the aggregate hedge fund industry, we can see that there is a sect of funds who sold off their full holdings last quarter. Intriguingly, Joel Greenblatt’s Gotham Asset Management said goodbye to the largest stake of the 750 funds followed by Insider Monkey, worth an estimated $12.6 million in stock, and Warren Lammert’s Granite Point Capital was right behind this move, as the fund sold off about $3.6 million worth. These moves are important to note, as total hedge fund interest dropped by 1 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Exxon Mobil Corporation (NYSE:XOM). These stocks are United Parcel Service, Inc. (NYSE:UPS), T-Mobile US, Inc. (NYSE:TMUS), Accenture Plc (NYSE:ACN), AstraZeneca plc (NASDAQ:AZN), Eli Lilly and Company (NYSE:LLY), Medtronic plc (NYSE:MDT), and NextEra Energy, Inc. (NYSE:NEE). This group of stocks’ market values are closest to XOM’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 59.4 hedge funds with bullish positions and the average amount invested in these stocks was $2989 million. That figure was $1380 million in XOM’s case. T-Mobile US, Inc. (NYSE:TMUS) is the most popular stock in this table. On the other hand AstraZeneca plc (NASDAQ:AZN) is the least popular one with only 33 bullish hedge fund positions. Exxon Mobil Corporation (NYSE:XOM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for XOM is 42.5. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on XOM as the stock returned 19.1% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.
Follow Exxon Mobil Corp (NYSE:XOM)
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Disclosure: None. This article was originally published at Insider Monkey.