Was The Smart Money Right About ConocoPhillips (COP)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of ConocoPhillips (NYSE:COP).

ConocoPhillips (NYSE:COP) investors should pay attention to an increase in hedge fund sentiment recently. ConocoPhillips (NYSE:COP) was in 49 hedge funds’ portfolios at the end of December. The all time high for this statistic is 70. Our calculations also showed that COP isn’t among the 30 most popular stocks among hedge funds (click for Q4 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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s check out the recent hedge fund action encompassing ConocoPhillips (NYSE:COP).

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

Heading into the first quarter of 2021, a total of 49 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. The graph below displays the number of hedge funds with bullish position in COP over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Fisher’s Fisher Asset Management has the largest position in ConocoPhillips (NYSE:COP), worth close to $204.5 million, amounting to 0.2% of its total 13F portfolio. The second most bullish fund manager is Point72 Asset Management, managed by Steve Cohen, which holds a $66.4 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other peers with similar optimism consist of Donald Yacktman’s Yacktman Asset Management, Ken Griffin’s Citadel Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Elm Ridge Capital allocated the biggest weight to ConocoPhillips (NYSE:COP), around 4.42% of its 13F portfolio. Hi-Line Capital Management is also relatively very bullish on the stock, dishing out 2.78 percent of its 13F equity portfolio to COP.

As one would reasonably expect, key money managers were breaking ground themselves. Impala Asset Management, managed by Robert Bishop, created the most outsized position in ConocoPhillips (NYSE:COP). Impala Asset Management had $17.7 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also initiated a $7 million position during the quarter. The other funds with brand new COP positions are Michael Gelband’s ExodusPoint Capital, Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, and Greg Eisner’s Engineers Gate Manager.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as ConocoPhillips (NYSE:COP) but similarly valued. We will take a look at General Dynamics Corporation (NYSE:GD), IDEXX Laboratories, Inc. (NASDAQ:IDXX), Constellation Brands, Inc. (NYSE:STZ), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), The Kraft Heinz Company (NASDAQ:KHC), Metlife Inc (NYSE:MET), and Roku, Inc. (NASDAQ:ROKU). All of these stocks’ market caps are similar to COP’s market cap.

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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 $3613 million. That figure was $687 million in COP’s case. Roku, Inc. (NASDAQ:ROKU) is the most popular stock in this table. On the other hand Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG) is the least popular one with only 10 bullish hedge fund positions. ConocoPhillips (NYSE:COP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for COP is 69. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on COP as the stock returned 29.1% since the end of Q4 (through 4/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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