Oil portfolio picks of hedge funds

Whenever retail investors can get their hands on the latest set of investment flow data, they should pay attention to it. Not only to find out who’s buying what and which asset classes – or individual stocks – might come out of favor in the coming months, but really to connect the dots to whatever trends and themes are affecting the broader markets and economy. are developing in

That way, instead of blindly following a hedge fund manager or a mega-investor, there’s an opportunity to learn more in-depth reasons why something might be bought or sold when considering exiting a position. is particularly important. This is why today’s hedge fund buying activity Energy fieldFor oil in particular, it is important to note this buying preference in conjunction with price action in other markets as a whole, not by itself.

In addition to oil prices, investors can look broadly to monitor the sector as a whole Energy Select Sector SPDR Fund NYSEARCA: XLE; That way, they can have a gauge of oil stocks and what sentiment might change. To follow the oil to the letter, that is, where United States Oil Fund LP NYSEARCA: USO also comes into play. However, for those looking for a specific step up in the value chain, like the name Occidental Petroleum Company NYSE: Oxy And Hess Co. NYSE: HES There are things to think about.

What hedge funds saw from ETF price action

Markets today are as interconnected as ever, and the days of individual price action are long gone. This means that most hedge funds are not involved in quantum computing or artificial intelligence Focusing on business relationship systems by connecting the dots to different themes.

This means that, for example, as bond prices fall and their yields rise, there is now a positive correlation to falling oil prices. This should not be the case, as higher yields generally imply higher inflation expectations, which should, in theory, be good for oil prices.

Well, these hedge funds don’t just rely on theory; He bought into the practice. This according to a Bloomberg reportHedge funds increased their WTI positions by 161,201 lots, meaning they are starting to get net long futures inventories today.

Even manufacturers like Hess and Occidental are doing it, as shown in Commitment to Merchant Report. Traders want to buy oil today to protect themselves from a price hike, which could eat into their profits if they can’t refine and deliver the crude quickly enough.

That’s why Warren Buffett recently bought up to 29% of Occidental and why Wall Street analysts have a consensus price target of $62.1 per share on the company, a net gain of 29.2% from where it trades today. demands More than that, the people at Mizuho were ready to break away from the pack.

By December 2024, this analyst Occidental Petroleum stock is valued at $70Represents another big rally of 45.5% from today’s levels.

More ways to tap up

Occidental Petroleum is one way to pay for the new value that will come to oil stocks, but it’s not the only one. Hess has gotten bearish traders to pull back slightly from shorting the stock in the past month, a trend investors can see through. A decline of 9.6% In the small interest of the company.

Beyond this sign of bearish capitulation, investors can look to new December 2024 ratings on Hess stock from Wells Fargo analysts.

Now with an overweight rating, valuations are expected to decline Close to $193 per share For Hess stock, that would mean a net gain of 47.8% from today’s stock price.

With that in mind, investors shouldn’t be surprised to see FFG Partners increase its holdings in the U.S. oil fund to 2.2% by December 2024, bringing its net position to an all-time high. has gone $5.3 million today.

The same can be said for Hamilton Capital’s 5.7% boost in the broad energy ETF through November 2024, which now has a A stake of $297.5 million. All told, these hedge funds and traders made the right decision by accumulating oil positions ahead of a potential rotation away from bonds.

It’s a thesis that retail investors can adopt today and understand that when that same relationship with bonds reverses, it’s likely time to get out and take your profits home.

Before you consider Hess, you might want to hear this.

MarketBeat keeps track of Wall Street’s top-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified Five stocks That top analysts are quietly telling their clients to buy now before the broader market hits… and Hess wasn’t on the list.

While Hess currently has a “moderate buy” rating among analysts, top analysts believe these five stocks are good buys.

Check out five stocks here

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