Do Hedge Funds Love Transocean Ltd (RIG)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Transocean Ltd (NYSE:RIG) in this article.

Transocean Ltd (NYSE:RIG) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 27 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that RIG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Riot Blockchain, Inc (NASDAQ:RIOT), Traeger Inc. (NYSE:COOK), and WalkMe Ltd. (NASDAQ:WKME) to gather more data points.

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. Now let’s check out the fresh hedge fund action regarding Transocean Ltd (NYSE:RIG).

Louis Bacon Moore of Moore Capital

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

At the end of September, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in RIG a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, D. E. Shaw’s D E Shaw has the largest position in Transocean Ltd (NYSE:RIG), worth close to $67.1 million, accounting for 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is John Overdeck and David Siegel of Two Sigma Advisors, with a $43.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass Stephen Mildenhall’s Contrarius Investment Management, Israel Englander’s Millennium Management and Rob Citrone’s Discovery Capital Management. In terms of the portfolio weights assigned to each position Key Square Capital Management allocated the biggest weight to Transocean Ltd (NYSE:RIG), around 6.12% of its 13F portfolio. Avenue Capital is also relatively very bullish on the stock, dishing out 3.11 percent of its 13F equity portfolio to RIG.

Due to the fact that Transocean Ltd (NYSE:RIG) has faced falling interest from the smart money, it’s easy to see that there is a sect of hedgies that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Mike Masters’s Masters Capital Management said goodbye to the largest position of the 750 funds tracked by Insider Monkey, comprising about $9 million in stock. Renaissance Technologies, also cut its stock, about $1.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Transocean Ltd (NYSE:RIG). We will take a look at Riot Blockchain, Inc (NASDAQ:RIOT), Traeger Inc. (NYSE:COOK), WalkMe Ltd. (NASDAQ:WKME), Star Bulk Carriers Corp. (NASDAQ:SBLK), Jackson Financial Inc. (NYSE:JXN), Mednax Inc. (NYSE:MD), and Wolverine World Wide, Inc. (NYSE:WWW). This group of stocks’ market caps are similar to RIG’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $297 million. That figure was $263 million in RIG’s case. Mednax Inc. (NYSE:MD) is the most popular stock in this table. On the other hand Riot Blockchain, Inc (NASDAQ:RIOT) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Transocean Ltd (NYSE:RIG) is more popular among hedge funds. Our overall hedge fund sentiment score for RIG is 74.3. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately RIG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RIG were disappointed as the stock returned -19.3% since the end of the third quarter (through 12/9) 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 since 2019.

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