Hedge Funds Are Piling Into Cenovus Energy Inc (CVE)

The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Cenovus Energy Inc (NYSE:CVE).

Is Cenovus Energy Inc (NYSE:CVE) a healthy stock for your portfolio? Hedge funds were in an optimistic mood. The number of long hedge fund bets rose by 9 in recent months. Cenovus Energy Inc (NYSE:CVE) was in 32 hedge funds’ portfolios at the end of June. The all time high for this statistic is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CVE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 23 hedge funds in our database with CVE positions at the end of the first 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 79 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.

Blair Levinsky of Waratah Capital Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 we’re going to check out the recent hedge fund action regarding Cenovus Energy Inc (NYSE:CVE).

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

At the end of the second quarter, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 39% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CVE over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Cenovus Energy Inc (NYSE:CVE) was held by Pzena Investment Management, which reported holding $126.4 million worth of stock at the end of June. It was followed by Millennium Management with a $74.6 million position. Other investors bullish on the company included Point72 Asset Management, Encompass Capital Advisors, and Galibier Capital Management. In terms of the portfolio weights assigned to each position Galibier Capital Management allocated the biggest weight to Cenovus Energy Inc (NYSE:CVE), around 5.89% of its 13F portfolio. Encompass Capital Advisors is also relatively very bullish on the stock, earmarking 3.33 percent of its 13F equity portfolio to CVE.

Now, key hedge funds have jumped into Cenovus Energy Inc (NYSE:CVE) headfirst. Galibier Capital Management, managed by Joseph Sirdevan, initiated the biggest position in Cenovus Energy Inc (NYSE:CVE). Galibier Capital Management had $43.8 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also made a $26.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, Charles Davidson and Joseph Jacobs’s Wexford Capital, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Cenovus Energy Inc (NYSE:CVE) but similarly valued. These stocks are Just Eat Takeaway.com N.V. (NASDAQ:GRUB), Mid America Apartment Communities Inc (NYSE:MAA), Coupa Software Incorporated (NASDAQ:COUP), KB Financial Group, Inc. (NYSE:KB), Bio-Rad Laboratories, Inc. (NYSE:BIO), Live Nation Entertainment, Inc. (NYSE:LYV), and Darden Restaurants, Inc. (NYSE:DRI). All of these stocks’ market caps are closest to CVE’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $1211 million. That figure was $563 million in CVE’s case. Coupa Software Incorporated (NASDAQ:COUP) is the most popular stock in this table. On the other hand KB Financial Group, Inc. (NYSE:KB) is the least popular one with only 8 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 66.1. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on CVE as the stock returned 21.9% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.

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