At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards PetroChina Company Limited (NYSE:PTR).
PetroChina Company Limited (NYSE:PTR) was in 7 hedge funds' portfolios at the end of March. PTR investors should pay attention to a decrease in hedge fund interest lately. There were 13 hedge funds in our database with PTR positions at the end of the previous quarter. Our calculations also showed that PTR isn't among the 30 most popular stocks among hedge funds (click for Q1 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 58 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 36% through May 18th. 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, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's go over the key hedge fund action encompassing PetroChina Company Limited (NYSE:PTR).
How have hedgies been trading PetroChina Company Limited (NYSE:PTR)?
Heading into the second quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -46% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PTR over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in PetroChina Company Limited (NYSE:PTR) was held by Renaissance Technologies, which reported holding $45.7 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $15.9 million position. Other investors bullish on the company included Two Sigma Advisors, Millennium Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Athos Capital allocated the biggest weight to PetroChina Company Limited (NYSE:PTR), around 0.31% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, setting aside 0.04 percent of its 13F equity portfolio to PTR.
Because PetroChina Company Limited (NYSE:PTR) has experienced falling interest from hedge fund managers, logic holds that there is a sect of funds who were dropping their positions entirely in the first quarter. It's worth mentioning that Paul Marshall and Ian Wace's Marshall Wace LLP cut the largest stake of the "upper crust" of funds watched by Insider Monkey, worth an estimated $2.9 million in stock. Cliff Asness's fund, AQR Capital Management, also dumped its stock, about $0.6 million worth. These moves are interesting, as total hedge fund interest was cut by 6 funds in the first quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as PetroChina Company Limited (NYSE:PTR) but similarly valued. These stocks are Lowe's Companies, Inc. (NYSE:LOW), Fiserv, Inc. (NASDAQ:FISV), Caterpillar Inc. (NYSE:CAT), and Stryker Corporation (NYSE:SYK). All of these stocks' market caps resemble PTR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LOW,71,3844984,-6 FISV,67,2949178,-11 CAT,34,2186891,-18 SYK,48,903368,5 Average,55,2471105,-7.5 [/table]
As you can see these stocks had an average of 55 hedge funds with bullish positions and the average amount invested in these stocks was $2471 million. That figure was $67 million in PTR's case. Lowe's Companies, Inc. (NYSE:LOW) is the most popular stock in this table. On the other hand Caterpillar Inc. (NYSE:CAT) is the least popular one with only 34 bullish hedge fund positions. Compared to these stocks PetroChina Company Limited (NYSE:PTR) is even less popular than CAT. Hedge funds dodged a bullet by taking a bearish stance towards PTR. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately PTR wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); PTR investors were disappointed as the stock returned 0.8% during the second quarter (through June 10th) 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 most of these stocks already outperformed the market so far in 2020.
