We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s take a look at whether Euronav NV (NYSE:EURN) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Euronav NV (NYSE:EURN) a buy right now? Hedge funds are in an optimistic mood. The number of long hedge fund positions inched up by 10 in recent months. Our calculations also showed that EURN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the financial world there are numerous tools investors can use to size up their holdings. A duo of the less known tools are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top money managers can outclass the broader indices by a significant amount (see the details here).
Daniel Gold of QVT Financial
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a glance at the new hedge fund action encompassing Euronav NV (NYSE:EURN).
How are hedge funds trading Euronav NV (NYSE:EURN)?
At the end of the fourth quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 56% from the third quarter of 2019. On the other hand, there were a total of 11 hedge funds with a bullish position in EURN a year ago. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
The largest stake in Euronav NV (NYSE:EURN) was held by Odey Asset Management Group, which reported holding $44.6 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $38.1 million position. Other investors bullish on the company included QVT Financial, Citadel Investment Group, and Huber Capital Management. In terms of the portfolio weights assigned to each position QVT Financial allocated the biggest weight to Euronav NV (NYSE:EURN), around 5.21% of its 13F portfolio. Odey Asset Management Group is also relatively very bullish on the stock, dishing out 4.66 percent of its 13F equity portfolio to EURN.
Consequently, some big names were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the biggest position in Euronav NV (NYSE:EURN). Arrowstreet Capital had $11.4 million invested in the company at the end of the quarter. Wayne Cooperman’s Cobalt Capital Management also made a $7.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Hintze’s CQS Cayman LP, George Baxter’s Sabrepoint Capital, and Richard Driehaus’s Driehaus Capital.
Let’s now review hedge fund activity in other stocks similar to Euronav NV (NYSE:EURN). We will take a look at Mimecast Limited (NASDAQ:MIME), Bill.com Holdings, Inc. (NYSE:BILL), Summit Materials Inc (NYSE:SUM), and LCI Industries (NYSE:LCII). This group of stocks’ market values are similar to EURN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MIME | 31 | 733997 | -8 |
| BILL | 32 | 310930 | 32 |
| SUM | 35 | 454382 | 8 |
| LCII | 17 | 127058 | 1 |
| Average | 28.75 | 406592 | 8.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $407 million. That figure was $232 million in EURN’s case. Summit Materials Inc (NYSE:SUM) is the most popular stock in this table. On the other hand LCI Industries (NYSE:LCII) is the least popular one with only 17 bullish hedge fund positions. Euronav NV (NYSE:EURN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately EURN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); EURN investors were disappointed as the stock returned -23.8% during the same time period 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 most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
