The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity 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, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Valvoline Inc. (NYSE:VVV) based on those filings.
Valvoline Inc. (NYSE:VVV) was in 39 hedge funds’ portfolios at the end of the first quarter of 2020. VVV has experienced an increase in hedge fund interest recently. There were 27 hedge funds in our database with VVV positions at the end of the previous quarter. Our calculations also showed that VVV isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 87% since March 2017 and outperformed the S&P 500 ETFs by more than 51 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Parag Vora of HG Vora Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s check out the key hedge fund action surrounding Valvoline Inc. (NYSE:VVV).
Hedge fund activity in Valvoline Inc. (NYSE:VVV)
Heading into the second quarter of 2020, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 44% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VVV over the last 18 quarters. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Valvoline Inc. (NYSE:VVV), with a stake worth $64.6 million reported as of the end of September. Trailing Renaissance Technologies was Tensile Capital, which amassed a stake valued at $41.2 million. HG Vora Capital Management, D E Shaw, and Candlestick Capital 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 Tensile Capital allocated the biggest weight to Valvoline Inc. (NYSE:VVV), around 8.11% of its 13F portfolio. HG Vora Capital Management is also relatively very bullish on the stock, earmarking 3.83 percent of its 13F equity portfolio to VVV.
As industrywide interest jumped, key money managers were breaking ground themselves. HG Vora Capital Management, managed by Parag Vora, created the most outsized position in Valvoline Inc. (NYSE:VVV). HG Vora Capital Management had $39.3 million invested in the company at the end of the quarter. Jack Woodruff’s Candlestick Capital Management also initiated a $27.6 million position during the quarter. The other funds with new positions in the stock are John Smith Clark’s Southpoint Capital Advisors, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Greg Eisner’s Engineers Gate Manager.
Let’s check out hedge fund activity in other stocks similar to Valvoline Inc. (NYSE:VVV). We will take a look at Compania Cervecerias Unidas S.A. (NYSE:CCU), Hutchison China MediTech Limited (NASDAQ:HCM), Bill.com Holdings, Inc. (NYSE:BILL), and Semtech Corporation (NASDAQ:SMTC). This group of stocks’ market values match VVV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CCU | 11 | 23883 | 3 |
| HCM | 6 | 19384 | -1 |
| BILL | 22 | 385025 | -10 |
| SMTC | 17 | 145584 | 5 |
| Average | 14 | 143469 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $143 million. That figure was $331 million in VVV’s case. Bill.com Holdings, Inc. (NYSE:BILL) is the most popular stock in this table. On the other hand Hutchison China MediTech Limited (NASDAQ:HCM) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Valvoline Inc. (NYSE:VVV) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on VVV as the stock returned 41% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
