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. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Chevron Corporation (NYSE:CVX) and determine whether the smart money was really smart about this stock.
Is Chevron Corporation (NYSE:CVX) undervalued? The best stock pickers were turning less bullish. The number of long hedge fund positions shrunk by 3 in recent months. Chevron Corporation (NYSE:CVX) was in 50 hedge funds' portfolios at the end of June. The all time high for this statistics is 44. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CVX isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 53 hedge funds in our database with CVX positions at the end of the first quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most market participants, hedge funds are viewed as slow, outdated financial vehicles of the past. While there are greater than 8000 funds with their doors open today, We choose to focus on the leaders of this club, around 850 funds. These investment experts shepherd the lion's share of the hedge fund industry's total capital, and by tracking their matchless equity investments, Insider Monkey has figured out many investment strategies that have historically outrun the broader indices. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Donald Sussman Paloma Partners
Donald Sussman of Paloma Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind let's analyze the recent hedge fund action regarding Chevron Corporation (NYSE:CVX).
How have hedgies been trading Chevron Corporation (NYSE:CVX)?
At the end of the second quarter, a total of 50 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CVX over the last 20 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Fisher Asset Management was the largest shareholder of Chevron Corporation (NYSE:CVX), with a stake worth $470.7 million reported as of the end of September. Trailing Fisher Asset Management was Diamond Hill Capital, which amassed a stake valued at $310.2 million. Citadel Investment Group, Millennium Management, 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 International Value Advisers allocated the biggest weight to Chevron Corporation (NYSE:CVX), around 3.36% of its 13F portfolio. Stamos Capital is also relatively very bullish on the stock, designating 2.76 percent of its 13F equity portfolio to CVX.
Because Chevron Corporation (NYSE:CVX) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there was a specific group of money managers who sold off their positions entirely heading into Q3. Interestingly, Steve Cohen's Point72 Asset Management dumped the largest investment of the "upper crust" of funds monitored by Insider Monkey, totaling close to $93.4 million in stock. Brandon Haley's fund, Holocene Advisors, also said goodbye to its stock, about $58.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds heading into Q3.
Let's check out hedge fund activity in other stocks similar to Chevron Corporation (NYSE:CVX). These stocks are Abbott Laboratories (NYSE:ABT), Eli Lilly and Company (NYSE:LLY), ASML Holding N.V. (NASDAQ:ASML), Novo Nordisk A/S (NYSE:NVO), NIKE, Inc. (NYSE:NKE), The Unilever Group (NYSE:UL), and Thermo Fisher Scientific Inc. (NYSE:TMO). This group of stocks' market caps resemble CVX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ABT,67,3504346,5 LLY,51,2161323,8 ASML,25,1961320,-5 NVO,24,3294368,0 NKE,71,2603242,-9 UL,13,149078,0 TMO,73,4525711,-7 Average,46.3,2599913,-1.1 [/table]
As you can see these stocks had an average of 46.3 hedge funds with bullish positions and the average amount invested in these stocks was $2600 million. That figure was $1585 million in CVX's case. Thermo Fisher Scientific Inc. (NYSE:TMO) is the most popular stock in this table. On the other hand The Unilever Group (NYSE:UL) is the least popular one with only 13 bullish hedge fund positions. Chevron Corporation (NYSE:CVX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CVX is 62.8. 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. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately CVX wasn't nearly as popular as these 10 stocks and hedge funds that were betting on CVX were disappointed as the stock returned -4.6% during the same time 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 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
