Does Berry Petroleum Corporation (NASDAQ:BRY) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Berry Petroleum Corporation (NASDAQ:BRY) investors should pay attention to an increase in support from the world’s most elite money managers of late. BRY was in 16 hedge funds’ portfolios at the end of March. There were 14 hedge funds in our database with BRY holdings at the end of the previous quarter. Our calculations also showed that BRY isn’t among the 30 most popular stocks among hedge funds.
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 market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let’s view the key hedge fund action encompassing Berry Petroleum Corporation (NASDAQ:BRY).
What have hedge funds been doing with Berry Petroleum Corporation (NASDAQ:BRY)?
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BRY over the last 15 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
The largest stake in Berry Petroleum Corporation (NASDAQ:BRY) was held by Oaktree Capital Management, which reported holding $90.1 million worth of stock at the end of March. It was followed by Venor Capital Management with a $24.5 million position. Other investors bullish on the company included Marathon Asset Management, Millennium Management, and Marshall Wace LLP.
As one would reasonably expect, specific money managers have jumped into Berry Petroleum Corporation (NASDAQ:BRY) headfirst. Oaktree Capital Management, managed by Howard Marks, established the most valuable position in Berry Petroleum Corporation (NASDAQ:BRY). Oaktree Capital Management had $90.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $11.8 million position during the quarter. The following funds were also among the new BRY investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Ron Gutfleish’s Elm Ridge Capital, and David Costen Haley’s HBK Investments.
Let’s go over hedge fund activity in other stocks similar to Berry Petroleum Corporation (NASDAQ:BRY). We will take a look at Trueblue Inc (NYSE:TBI), Lantheus Holdings Inc (NASDAQ:LNTH), Ra Pharmaceuticals, Inc. (NASDAQ:RARX), and Coherus Biosciences Inc (NASDAQ:CHRS). This group of stocks’ market valuations match BRY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TBI | 17 | 78413 | 2 |
| LNTH | 18 | 99743 | 1 |
| RARX | 20 | 267787 | 3 |
| CHRS | 27 | 199168 | 7 |
| Average | 20.5 | 161278 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. That figure was $167 million in BRY’s case. Coherus Biosciences Inc (NASDAQ:CHRS) is the most popular stock in this table. On the other hand Trueblue Inc (NYSE:TBI) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Berry Petroleum Corporation (NASDAQ:BRY) is even less popular than TBI. Hedge funds dodged a bullet by taking a bearish stance towards BRY. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately BRY wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BRY investors were disappointed as the stock returned -4.2% during the same time frame and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.
