Is Occidental Petroleum Corporation (OXY) A Good Stock To Buy?

·6 min read

Is Occidental Petroleum Corporation (NYSE:OXY) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is OXY a good stock to buy? Occidental Petroleum Corporation (NYSE:OXY) has experienced an increase in hedge fund interest in recent months. Occidental Petroleum Corporation (NYSE:OXY) was in 52 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 62. Our calculations also showed that OXY isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

According to most stock holders, hedge funds are viewed as worthless, outdated investment vehicles of years past. While there are over 8000 funds in operation at present, Our experts choose to focus on the upper echelon of this club, about 850 funds. These hedge fund managers shepherd bulk of all hedge funds' total asset base, and by monitoring their finest picks, Insider Monkey has found a number of investment strategies that have historically outpaced Mr. Market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Carl Icahn's top 10 stock picks
Carl Icahn's top 10 stock picks

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $29 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. 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. Keeping this in mind let's analyze the new hedge fund action regarding Occidental Petroleum Corporation (NYSE:OXY).

Do Hedge Funds Think OXY Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 52 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the previous quarter. On the other hand, there were a total of 35 hedge funds with a bullish position in OXY a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Is OXY A Good Stock To Buy?
Is OXY A Good Stock To Buy?

More specifically, Icahn Capital LP was the largest shareholder of Occidental Petroleum Corporation (NYSE:OXY), with a stake worth $2290 million reported as of the end of March. Trailing Icahn Capital LP was Icahn Capital LP, which amassed a stake valued at $229.9 million. Appaloosa Management LP, Citadel Investment Group, and Paulson & Co 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 Icahn Capital LP allocated the biggest weight to Occidental Petroleum Corporation (NYSE:OXY), around 9.6% of its 13F portfolio. Arosa Capital Management is also relatively very bullish on the stock, earmarking 5.27 percent of its 13F equity portfolio to OXY.

As industrywide interest jumped, key money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the largest call position in Occidental Petroleum Corporation (NYSE:OXY). Marshall Wace LLP had $50.5 million invested in the company at the end of the quarter. Bruce Kovner's Caxton Associates LP also initiated a $44 million position during the quarter. The other funds with brand new OXY positions are Steve Cohen's Point72 Asset Management, Guy Shahar's DSAM Partners, and Scott Bessent's Key Square Capital Management.

Let's go over hedge fund activity in other stocks similar to Occidental Petroleum Corporation (NYSE:OXY). These stocks are Deutsche Bank AG (NYSE:DB), Expedia Group Inc (NASDAQ:EXPE), Carnival Corporation & plc (NYSE:CUK), Maxim Integrated Products Inc. (NASDAQ:MXIM), DraftKings Inc. (NASDAQ:DKNG), Arthur J. Gallagher & Co. (NYSE:AJG), and Nasdaq, Inc. (NASDAQ:NDAQ). All of these stocks' market caps match OXY's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DB,16,1773587,0 EXPE,86,6157292,10 CUK,4,105412,-3 MXIM,55,3238393,1 DKNG,43,966256,-5 AJG,24,283959,0 NDAQ,22,236137,-5 Average,35.7,1823005,-0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.7 hedge funds with bullish positions and the average amount invested in these stocks was $1823 million. That figure was $3418 million in OXY's case. Expedia Group Inc (NASDAQ:EXPE) is the most popular stock in this table. On the other hand Carnival Corporation & plc (NYSE:CUK) is the least popular one with only 4 bullish hedge fund positions. Occidental Petroleum Corporation (NYSE:OXY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OXY is 62.4. 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 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 beat the market again by 3.3 percentage points. Unfortunately OXY wasn't nearly as popular as these 5 stocks and hedge funds that were betting on OXY were disappointed as the stock returned 6.5% since the end of March (through 6/11) 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 many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.

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