Were Hedge Funds Right About Flocking Into Occidental Petroleum Corporation (OXY) ?

A market surge in the first quarter, spurred by easing global macroeconomic concerns and Powell’s pivot ended up having a positive impact on the markets and many hedge funds as a result. The stocks of smaller companies which were especially hard hit during the fourth quarter slightly outperformed the market during the first quarter. Unfortunately, Trump is unpredictable and volatility returned in the second quarter and smaller-cap stocks went back to selling off. We finished compiling the latest 13F filings to get an idea about what hedge funds are thinking about the overall market as well as individual stocks. In this article we will study the hedge fund sentiment to see how those concerns affected their ownership of Occidental Petroleum Corporation (NYSE:OXY) during the quarter.

Is Occidental Petroleum Corporation (NYSE:OXY) a bargain? Hedge funds are becoming more confident. The number of bullish hedge fund bets advanced by 3 in recent months. Our calculations also showed that OXY isn’t among the 30 most popular stocks among hedge funds.

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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

William Harnisch

Let’s take a gander at the latest hedge fund action regarding Occidental Petroleum Corporation (NYSE:OXY).

Hedge fund activity in Occidental Petroleum Corporation (NYSE:OXY)

Heading into the second quarter of 2019, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OXY over the last 15 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.


The largest stake in Occidental Petroleum Corporation (NYSE:OXY) was held by Two Sigma Advisors, which reported holding $340.9 million worth of stock at the end of March. It was followed by D E Shaw with a $197 million position. Other investors bullish on the company included Renaissance Technologies, Millennium Management, and Fisher Asset Management.

As aggregate interest increased, some big names have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the biggest position in Occidental Petroleum Corporation (NYSE:OXY). Arrowstreet Capital had $10.7 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also made a $10 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Benjamin A. Smith’s Laurion Capital Management, and William Harnisch’s Peconic Partners LLC.

Let’s now review hedge fund activity in other stocks similar to Occidental Petroleum Corporation (NYSE:OXY). These stocks are Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), General Dynamics Corporation (NYSE:GD), Exelon Corporation (NYSE:EXC), and Allergan plc (NYSE:AGN). This group of stocks’ market caps resemble OXY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SMFG 10 408347 -1
GD 42 6460054 5
EXC 33 2513347 0
AGN 53 3989971 -8
Average 34.5 3342930 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.5 hedge funds with bullish positions and the average amount invested in these stocks was $3343 million. That figure was $880 million in OXY’s case. Allergan plc (NYSE:AGN) 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. Occidental Petroleum Corporation (NYSE:OXY) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately OXY wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on OXY were disappointed as the stock returned -21.6% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

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