Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards CNX Resources Corporation (NYSE:CNX) changed recently.
Is CNX Resources Corporation (NYSE:CNX) a superb investment today? Prominent investors were cutting their exposure. The number of bullish hedge fund bets retreated by 2 recently. CNX Resources Corporation (NYSE:CNX) was in 23 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 38. Our calculations also showed that CNX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 25 hedge funds in our database with CNX holdings at the end of December.
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 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Joel Greenblatt of Gotham Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. Now we're going to take a gander at the key hedge fund action encompassing CNX Resources Corporation (NYSE:CNX).
Do Hedge Funds Think CNX Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the fourth quarter of 2020. On the other hand, there were a total of 24 hedge funds with a bullish position in CNX a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Southeastern Asset Management held the most valuable stake in CNX Resources Corporation (NYSE:CNX), which was worth $434.3 million at the end of the fourth quarter. On the second spot was Aequim Alternative Investments which amassed $29.2 million worth of shares. Arrowstreet Capital, D E Shaw, and AQR 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 Southeastern Asset Management allocated the biggest weight to CNX Resources Corporation (NYSE:CNX), around 9.29% of its 13F portfolio. Quaker Capital Investments is also relatively very bullish on the stock, setting aside 4.43 percent of its 13F equity portfolio to CNX.
Because CNX Resources Corporation (NYSE:CNX) has faced a decline in interest from the aggregate hedge fund industry, it's safe to say that there lies a certain "tier" of money managers that elected to cut their positions entirely in the first quarter. Intriguingly, Ken Griffin's Citadel Investment Group sold off the largest investment of the 750 funds watched by Insider Monkey, worth an estimated $21.9 million in stock, and Matt Smith's Deep Basin Capital was right behind this move, as the fund dumped about $14.1 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds in the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to CNX Resources Corporation (NYSE:CNX). These stocks are Arvinas, Inc. (NASDAQ:ARVN), Brinker International, Inc. (NYSE:EAT), Assured Guaranty Ltd. (NYSE:AGO), Shutterstock Inc (NYSE:SSTK), Revolve Group, Inc. (NYSE:RVLV), Vertex, Inc. (NASDAQ:VERX), and Butterfly Network, Inc. (NYSE:BFLY). This group of stocks' market valuations are similar to CNX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ARVN,28,365585,-6 EAT,31,475033,3 AGO,22,192881,5 SSTK,18,207880,-5 RVLV,29,256608,5 VERX,11,40913,0 BFLY,32,299537,32 Average,24.4,262634,4.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $263 million. That figure was $607 million in CNX's case. Butterfly Network, Inc. (NYSE:BFLY) is the most popular stock in this table. On the other hand Vertex, Inc. (NASDAQ:VERX) is the least popular one with only 11 bullish hedge fund positions. CNX Resources Corporation (NYSE:CNX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CNX is 49.7. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately CNX wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CNX investors were disappointed as the stock returned -14.6% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.