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Should You Buy Ecopetrol S.A. (EC)?

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Ecopetrol S.A. (NYSE:EC).

Hedge fund interest in Ecopetrol S.A. (NYSE:EC) 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 EC to other stocks including Johnson Controls International plc (NYSE:JCI), Eaton Corporation plc (NYSE:ETN), and Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) to get a better sense of its popularity.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.

RENAISSANCE TECHNOLOGIES

Jim Simons of Renaissance Technologies

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the new hedge fund action regarding Ecopetrol S.A. (NYSE:EC).

Hedge fund activity in Ecopetrol S.A. (NYSE:EC)

At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2019. On the other hand, there were a total of 13 hedge funds with a bullish position in EC a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is EC A Good Stock To Buy?

Among these funds, Renaissance Technologies held the most valuable stake in Ecopetrol S.A. (NYSE:EC), which was worth $119.9 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $36.7 million worth of shares. Point72 Asset Management, Bailard Inc, and Qtron Investments 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 Qtron Investments allocated the biggest weight to Ecopetrol S.A. (NYSE:EC), around 0.63% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.1 percent of its 13F equity portfolio to EC.

Since Ecopetrol S.A. (NYSE:EC) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedgies who sold off their entire stakes last quarter. Interestingly, David E. Shaw’s D E Shaw sold off the largest stake of the 750 funds followed by Insider Monkey, worth about $3 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace was right behind this move, as the fund said goodbye to about $0.3 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Ecopetrol S.A. (NYSE:EC). These stocks are Johnson Controls International plc (NYSE:JCI), Eaton Corporation plc (NYSE:ETN), Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), and Humana Inc (NYSE:HUM). This group of stocks’ market caps are similar to EC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JCI 22 598575 4
ETN 31 463777 -5
BBVA 9 275548 2
HUM 61 3527353 -1
Average 30.75 1216313 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.75 hedge funds with bullish positions and the average amount invested in these stocks was $1216 million. That figure was $175 million in EC’s case. Humana Inc (NYSE:HUM) is the most popular stock in this table. On the other hand Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) is the least popular one with only 9 bullish hedge fund positions. Ecopetrol S.A. (NYSE:EC) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on EC, though not to the same extent, as the stock returned 7.5% during the first two months of the fourth quarter and outperformed the market.

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

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