The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards Concho Resources Inc. (NYSE:CXO).
Is Concho Resources Inc. (NYSE:CXO) the right pick for your portfolio? The smart money was getting more optimistic. The number of bullish hedge fund positions moved up by 3 recently. Concho Resources Inc. (NYSE:CXO) was in 47 hedge funds’ portfolios at the end of September. The all time high for this statistic is 45. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CXO 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, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis 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. With all of this in mind let’s take a gander at the recent hedge fund action surrounding Concho Resources Inc. (NYSE:CXO).
Do Hedge Funds Think CXO Is A Good Stock To Buy Now?
At the end of September, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. On the other hand, there were a total of 30 hedge funds with a bullish position in CXO a year ago. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, D E Shaw held the most valuable stake in Concho Resources Inc. (NYSE:CXO), which was worth $133.3 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $68.4 million worth of shares. Citadel Investment Group, Holocene Advisors, and Adage Capital Management 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 SIR Capital Management allocated the biggest weight to Concho Resources Inc. (NYSE:CXO), around 6.69% of its 13F portfolio. Deep Basin Capital is also relatively very bullish on the stock, designating 5.57 percent of its 13F equity portfolio to CXO.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Carlson Capital, managed by Clint Carlson, initiated the most outsized position in Concho Resources Inc. (NYSE:CXO). Carlson Capital had $14.3 million invested in the company at the end of the quarter. Kevin Michael Ulrich and Anthony Davis’s Anchorage Advisors also made a $4.4 million investment in the stock during the quarter. The following funds were also among the new CXO investors: Minhua Zhang’s Weld Capital Management, Renee Yao’s Neo Ivy Capital, and Parvinder Thiara’s Athanor Capital.
Let’s go over hedge fund activity in other stocks similar to Concho Resources Inc. (NYSE:CXO). We will take a look at Guidewire Software Inc (NYSE:GWRE), GCI Liberty, Inc. (NASDAQ:GLIBA), Camden Property Trust (NYSE:CPT), Centrais Eletricas Brasileiras SA (NYSE:EBR), CureVac N.V. (NASDAQ:CVAC), Algonquin Power & Utilities Corp. (NYSE:AQN), and Vail Resorts, Inc. (NYSE:MTN). This group of stocks’ market valuations are closest to CXO’s market valuation.
|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 23 hedge funds with bullish positions and the average amount invested in these stocks was $707 million. That figure was $732 million in CXO’s case. GCI Liberty, Inc. (NASDAQ:GLIBA) is the most popular stock in this table. On the other hand Centrais Eletricas Brasileiras SA (NYSE:EBR) is the least popular one with only 4 bullish hedge fund positions. Concho Resources Inc. (NYSE:CXO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CXO is 86.9. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on CXO as the stock returned 41.6% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Concho Resources Inc (NYSE:CXO)
Follow Concho Resources Inc (NYSE:CXO)
Disclosure: None. This article was originally published at Insider Monkey.