Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the second quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 20 stock picks outperformed the S&P 500 Index by 6.6 percentage points through May 30th. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Penn Virginia Corporation (NASDAQ:PVAC) investors should be aware of an increase in support from the world’s most elite money managers in recent months. Our calculations also showed that PVAC isn’t among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a look at the fresh hedge fund action regarding Penn Virginia Corporation (NASDAQ:PVAC).
What does the smart money think about Penn Virginia Corporation (NASDAQ:PVAC)?
Heading into the second quarter of 2019, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in PVAC a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Nathaniel August’s Mangrove Partners has the number one position in Penn Virginia Corporation (NASDAQ:PVAC), worth close to $76.3 million, corresponding to 10.2% of its total 13F portfolio. On Mangrove Partners’s heels is Jon Bauer of Contrarian Capital, with a $34.5 million position; 3.1% of its 13F portfolio is allocated to the company. Remaining peers that are bullish contain Robert Emil Zoellner’s Alpine Associates, Todd J. Kantor’s Encompass Capital Advisors and Phil Frohlich’s Prescott Group Capital Management.
As one would reasonably expect, key money managers have been driving this bullishness. Yaupon Capital, managed by Steve Pattyn, created the biggest position in Penn Virginia Corporation (NASDAQ:PVAC). Yaupon Capital had $3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $1.4 million investment in the stock during the quarter. The other funds with brand new PVAC positions are Sara Nainzadeh’s Centenus Global Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Frederick DiSanto’s Ancora Advisors.
Let’s go over hedge fund activity in other stocks similar to Penn Virginia Corporation (NASDAQ:PVAC). These stocks are CorePoint Lodging Inc. (NYSE:CPLG), eXp World Holdings, Inc. (NASDAQ:EXPI), Heritage-Crystal Clean, Inc. (NASDAQ:HCCI), and Axcelis Technologies Inc (NASDAQ:ACLS). This group of stocks’ market values resemble PVAC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CPLG | 13 | 39801 | -3 |
| EXPI | 4 | 3233 | -3 |
| HCCI | 12 | 74834 | 1 |
| ACLS | 16 | 75026 | 7 |
| Average | 11.25 | 48224 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $167 million in PVAC’s case. Axcelis Technologies Inc (NASDAQ:ACLS) is the most popular stock in this table. On the other hand eXp World Holdings, Inc. (NASDAQ:EXPI) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Penn Virginia Corporation (NASDAQ:PVAC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately PVAC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PVAC were disappointed as the stock returned -28.8% during the same 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
