Hedge Funds Never Been Less Bullish On Ovintiv Inc. (OVV)

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 Ovintiv Inc. (NYSE:OVV) based on those filings.

Is Ovintiv Inc. (NYSE:OVV) a good investment now? Money managers are taking a pessimistic view. The number of long hedge fund bets fell by 4 recently. Our calculations also showed that OVV 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Overdeck of Two Sigma Advisors

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 we’re going to check out the latest hedge fund action surrounding Ovintiv Inc. (NYSE:OVV).

What have hedge funds been doing with Ovintiv Inc. (NYSE:OVV)?

At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OVV over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

More specifically, Millennium Management was the largest shareholder of Ovintiv Inc. (NYSE:OVV), with a stake worth $8.3 million reported as of the end of September. Trailing Millennium Management was Two Sigma Advisors, which amassed a stake valued at $7.8 million. Renaissance Technologies, Marshall Wace LLP, and Alyeska Investment Group 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 Contrarius Investment Management allocated the biggest weight to Ovintiv Inc. (NYSE:OVV), around 0.14% of its 13F portfolio. Lion Point is also relatively very bullish on the stock, designating 0.06 percent of its 13F equity portfolio to OVV.

Judging by the fact that Ovintiv Inc. (NYSE:OVV) has faced falling interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of money managers who were dropping their entire stakes last quarter. At the top of the heap, D. E. Shaw’s D E Shaw dropped the largest position of all the hedgies tracked by Insider Monkey, worth about $3.8 million in stock, and Phill Gross and Robert Atchinson’s Adage Capital Management was right behind this move, as the fund dropped about $3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 4 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Ovintiv Inc. (NYSE:OVV). These stocks are Cytokinetics, Inc. (NASDAQ:CYTK), International Seaways, Inc. (NYSE:INSW), Talend S.A. (NASDAQ:TLND), and Third Point Reinsurance Ltd (NYSE:TPRE). This group of stocks’ market valuations are similar to OVV’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $187 million. That figure was $27 million in OVV’s case. Talend S.A. (NASDAQ:TLND) is the most popular stock in this table. On the other hand Third Point Reinsurance Ltd (NYSE:TPRE) is the least popular one with only 17 bullish hedge fund positions. Ovintiv Inc. (NYSE:OVV) is not the least popular stock in this group but hedge fund interest is still below average. 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 gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on OVV as the stock returned 291.7% during the second quarter and outperformed the market by an even larger margin.

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