Before we spend days researching a stock idea we like to take a look at how hedge funds and billionaire investors recently traded that stock. Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of the third quarter of 2018. This means hedge funds that are allocating a higher percentage of their portfolio to small-cap stocks were probably underperforming the market. However, this also means that as small-cap stocks start to mean revert, these hedge funds will start delivering better returns than the S&P 500 Index funds. In this article, we will take a look at what hedge funds think about VAALCO Energy, Inc. (NYSE:EGY).
Hedge fund interest in VAALCO Energy, Inc. (NYSE:EGY) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare EGY to other stocks including Allied Esports Entertainment, Inc. (NASDAQ:AESE), Pyxus International, Inc. (NASDAQ:PYX), and Gaiam, Inc. (NASDAQ:GAIA) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most traders, hedge funds are seen as underperforming, old financial vehicles of yesteryear. While there are more than 8000 funds with their doors open at the moment, Our researchers look at the elite of this group, approximately 750 funds. Most estimates calculate that this group of people preside over most of all hedge funds’ total asset base, and by shadowing their highest performing picks, Insider Monkey has discovered a few investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Jim Simons of Renaissance Technologies
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. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a glance at the fresh hedge fund action regarding VAALCO Energy, Inc. (NYSE:EGY).
What have hedge funds been doing with VAALCO Energy, Inc. (NYSE:EGY)?
Heading into the fourth quarter of 2019, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in EGY over the last 17 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies, holds the number one position in VAALCO Energy, Inc. (NYSE:EGY). Renaissance Technologies has a $7.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies’s heels is Fondren Management, led by Bradley Louis Radoff, holding a $5 million position; the fund has 4.2% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions comprise Frederick DiSanto’s Ancora Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and David Harding’s Winton Capital Management. In terms of the portfolio weights assigned to each position Fondren Management allocated the biggest weight to VAALCO Energy, Inc. (NYSE:EGY), around 4.17% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, dishing out 0.07 percent of its 13F equity portfolio to EGY.
Due to the fact that VAALCO Energy, Inc. (NYSE:EGY) has experienced falling interest from the aggregate hedge fund industry, we can see that there was a specific group of money managers who were dropping their positions entirely in the third quarter. It’s worth mentioning that Matthew Hulsizer’s PEAK6 Capital Management dumped the biggest investment of the 750 funds watched by Insider Monkey, totaling close to $0.2 million in stock. Peter Algert and Kevin Coldiron’s fund, Algert Coldiron Investors, also said goodbye to its stock, about $0.1 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to VAALCO Energy, Inc. (NYSE:EGY). These stocks are Allied Esports Entertainment, Inc. (NASDAQ:AESE), Pyxus International, Inc. (NASDAQ:PYX), Gaiam, Inc. (NASDAQ:GAIA), and Nantkwest Inc (NASDAQ:NK). This group of stocks’ market values are closest to EGY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AESE | 3 | 2088 | -6 |
| PYX | 5 | 7889 | -5 |
| GAIA | 6 | 12663 | -3 |
| NK | 6 | 3375 | -1 |
| Average | 5 | 6504 | -3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $15 million in EGY’s case. Gaiam, Inc. (NASDAQ:GAIA) is the most popular stock in this table. On the other hand Allied Esports Entertainment, Inc. (NASDAQ:AESE) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks VAALCO Energy, Inc. (NYSE:EGY) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately EGY wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on EGY were disappointed as the stock returned -9.9% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
