The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Bonanza Creek Energy Inc (NYSE:BCEI) based on those filings.
Is Bonanza Creek Energy Inc (NYSE:BCEI) a bargain? Prominent investors were in an optimistic mood. The number of bullish hedge fund positions moved up by 2 in recent months. Bonanza Creek Energy Inc (NYSE:BCEI) was in 19 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 22. Our calculations also showed that BCEI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 17 hedge funds in our database with BCEI positions at the end of the fourth quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Richard Driehaus of Driehaus Capital
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 let’s check out the recent hedge fund action regarding Bonanza Creek Energy Inc (NYSE:BCEI).
Do Hedge Funds Think BCEI Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BCEI 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.
More specifically, SIR Capital Management was the largest shareholder of Bonanza Creek Energy Inc (NYSE:BCEI), with a stake worth $13.8 million reported as of the end of March. Trailing SIR Capital Management was Driehaus Capital, which amassed a stake valued at $11.1 million. Divisar Capital, Diamond Hill Capital, and Arrowstreet Capital 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 Divisar Capital allocated the biggest weight to Bonanza Creek Energy Inc (NYSE:BCEI), around 3.27% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, earmarking 2.32 percent of its 13F equity portfolio to BCEI.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Driehaus Capital, managed by Richard Driehaus, created the largest position in Bonanza Creek Energy Inc (NYSE:BCEI). Driehaus Capital had $11.1 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $4.4 million position during the quarter. The other funds with new positions in the stock are Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital), John Overdeck and David Siegel’s Two Sigma Advisors, and Ken Griffin’s Citadel Investment Group.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Bonanza Creek Energy Inc (NYSE:BCEI) but similarly valued. These stocks are Immatics N.V. (NASDAQ:IMTX), Denison Mines Corp (NYSE:DNN), A10 Networks Inc (NYSE:ATEN), Maverix Metals Inc. (NYSE:MMX), Alliance Resource Partners, L.P. (NASDAQ:ARLP), BEST Inc. (NYSE:BEST), and Clovis Oncology Inc (NASDAQ:CLVS). This group of stocks’ market caps are closest to BCEI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IMTX | 23 | 192237 | 1 |
| DNN | 10 | 18188 | 4 |
| ATEN | 15 | 141659 | -7 |
| MMX | 6 | 30937 | -3 |
| ARLP | 7 | 37543 | 1 |
| BEST | 5 | 857 | -5 |
| CLVS | 14 | 75987 | -3 |
| Average | 11.4 | 71058 | -1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.4 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $73 million in BCEI’s case. Immatics N.V. (NASDAQ:IMTX) is the most popular stock in this table. On the other hand BEST Inc. (NYSE:BEST) is the least popular one with only 5 bullish hedge fund positions. Bonanza Creek Energy Inc (NYSE:BCEI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BCEI is 71.8. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on BCEI, though not to the same extent, as the stock returned 11.9% since Q1 (through July 16th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
