Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Cenovus Energy Inc (NYSE:CVE) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Cenovus Energy Inc (NYSE:CVE) shareholders have witnessed a decrease in enthusiasm from smart money recently. Cenovus Energy Inc (NYSE:CVE) was in 30 hedge funds’ portfolios at the end of September. The all time high for this statistic is 32. There were 32 hedge funds in our database with CVE positions at the end of the second quarter. Our calculations also showed that CVE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let’s review the recent hedge fund action surrounding Cenovus Energy Inc (NYSE:CVE).
Richard S. Pzena of Pzena Investment Management
Do Hedge Funds Think CVE Is A Good Stock To Buy Now?
At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CVE over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Pzena Investment Management held the most valuable stake in Cenovus Energy Inc (NYSE:CVE), which was worth $127.7 million at the end of the third quarter. On the second spot was Millennium Management which amassed $112 million worth of shares. Waratah Capital Advisors, Point72 Asset Management, and Contrarius Investment 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 Corriente Advisors allocated the biggest weight to Cenovus Energy Inc (NYSE:CVE), around 10.5% of its 13F portfolio. Galibier Capital Management is also relatively very bullish on the stock, dishing out 7.14 percent of its 13F equity portfolio to CVE.
Because Cenovus Energy Inc (NYSE:CVE) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of funds that elected to cut their full holdings heading into Q4. It’s worth mentioning that Todd J. Kantor’s Encompass Capital Advisors said goodbye to the largest position of the 750 funds followed by Insider Monkey, worth an estimated $47.8 million in stock, and Scott Bessent’s Key Square Capital Management was right behind this move, as the fund said goodbye to about $14 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to Cenovus Energy Inc (NYSE:CVE). These stocks are Church & Dwight Co., Inc. (NYSE:CHD), Expeditors International of Washington, Inc. (NASDAQ:EXPD), Teladoc Health, Inc (NYSE:TDOC), Enphase Energy Inc (NASDAQ:ENPH), Dynatrace, Inc. (NYSE:DT), NetApp Inc. (NASDAQ:NTAP), and Teledyne Technologies Incorporated (NYSE:TDY). This group of stocks’ market caps resemble CVE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHD | 20 | 1362889 | -15 |
| EXPD | 26 | 452843 | -3 |
| TDOC | 40 | 2836350 | -3 |
| ENPH | 52 | 637786 | 8 |
| DT | 41 | 2389054 | -9 |
| NTAP | 29 | 671456 | -2 |
| TDY | 38 | 1703394 | 2 |
| Average | 35.1 | 1436253 | -3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.1 hedge funds with bullish positions and the average amount invested in these stocks was $1436 million. That figure was $718 million in CVE’s case. Enphase Energy Inc (NASDAQ:ENPH) is the most popular stock in this table. On the other hand Church & Dwight Co., Inc. (NYSE:CHD) is the least popular one with only 20 bullish hedge fund positions. Cenovus Energy Inc (NYSE:CVE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CVE is 46.8. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on CVE as the stock returned 45.1% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
Follow Cenovus Energy Inc (TSE:CVE)
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Disclosure: None. This article was originally published at Insider Monkey.
