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Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Exxon Mobil Corporation (NYSE:XOM) to find out whether there were any major changes in hedge funds' views.
Exxon Mobil Corporation (NYSE:XOM) investors should be aware of an increase in enthusiasm from smart money lately. Exxon Mobil Corporation (NYSE:XOM) was in 65 hedge funds' portfolios at the end of March. The all time high for this statistic is 68. There were 63 hedge funds in our database with XOM holdings at the end of December. Our calculations also showed that XOM isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Frank Brosens of Taconic Capital
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. Keeping this in mind let's take a look at the fresh hedge fund action regarding Exxon Mobil Corporation (NYSE:XOM).
Do Hedge Funds Think XOM Is A Good Stock To Buy Now?
At Q1's end, a total of 65 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards XOM over the last 23 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Exxon Mobil Corporation (NYSE:XOM) was held by Fisher Asset Management, which reported holding $450 million worth of stock at the end of December. It was followed by Adage Capital Management with a $363.3 million position. Other investors bullish on the company included Citadel Investment Group, D E Shaw, and Millennium Management. In terms of the portfolio weights assigned to each position 0 allocated the biggest weight to Exxon Mobil Corporation (NYSE:XOM), around 18.81% of its 13F portfolio. 0 is also relatively very bullish on the stock, designating 6.96 percent of its 13F equity portfolio to XOM.
Now, specific money managers were leading the bulls' herd. Renaissance Technologies, assembled the biggest position in Exxon Mobil Corporation (NYSE:XOM). Renaissance Technologies had $162.1 million invested in the company at the end of the quarter. Jacob Mitchell's Antipodes Partners also initiated a $123 million position during the quarter. The other funds with brand new XOM positions are Jeff Ubben's Inclusive Capital, Frank Brosens's Taconic Capital, and Anand Parekh's Alyeska Investment Group.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Exxon Mobil Corporation (NYSE:XOM) but similarly valued. We will take a look at Netflix, Inc. (NASDAQ:NFLX), Adobe Inc. (NASDAQ:ADBE), The Coca-Cola Company (NYSE:KO), Cisco Systems, Inc. (NASDAQ:CSCO), Toyota Motor Corporation (NYSE:TM), AT&T Inc. (NYSE:T), and Abbott Laboratories (NYSE:ABT). This group of stocks' market values match XOM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NFLX,110,14159343,-6 ADBE,107,12111692,-7 KO,61,24903946,-1 CSCO,59,5194074,-1 TM,18,824174,7 T,63,2701777,5 ABT,65,5136552,1 Average,69,9290223,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 69 hedge funds with bullish positions and the average amount invested in these stocks was $9290 million. That figure was $2770 million in XOM's case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand Toyota Motor Corporation (NYSE:TM) is the least popular one with only 18 bullish hedge fund positions. Exxon Mobil Corporation (NYSE:XOM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for XOM is 61.2. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on XOM as the stock returned 13% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.