Devon Energy Corp (NYSE:DVN)’s shares are trading higher on Wednesday after the analysts at Barclays reiterated their ‘Overweight’ rating and upped their price target to $38 per share from $34 per share. The analysts like how Devon is trading at a discount to its asset quality and believe Devon shares will deliver good returns as management improves the balance sheet and as crude prices continue to trend higher. Devon Energy Corp (NYSE:DVN) has substantial assets in the Eagle Ford and STACK as well as in the Delaware Basin. Many of its wells in those areas have made substantial productivity and efficiency improvements over the past few years. Hedge funds seem to be fond of Devon Energy, as we will see later on in this article.
The number of funds with long positions in Devon Energy rose by 11 recently. However, the level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Citrix Systems, Inc. (NASDAQ:CTXS), Tractor Supply Company (NASDAQ:TSCO), and Rockwell Collins, Inc. (NYSE:COL) to gather more data points.
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Today there are a lot of methods stock market investors employ to grade publicly traded companies. A pair of the less utilized methods are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the top money managers can outpace the broader indices by a significant amount (see the details here).
With all of this in mind, we’re going to take a gander at the latest action encompassing Devon Energy Corp (NYSE:DVN).
Heading into the second quarter of 2016, a total of 58 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Anand Parekh’s Alyeska Investment Group has the number one position in Devon Energy Corp (NYSE:DVN), worth close to $168 million, accounting for 1.7% of its total 13F portfolio. Coming in second is Millennium Management, led by Israel Englander, holding a $137.4 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions consist of Bill Miller’s Legg Mason Capital Management, Stuart J. Zimmer’s Zimmer Partners and Ken Griffin’s Citadel Investment Group.
On the next page, we are going to take a closer look at some investors that added Devon Energy to their equity portfolios during the first quarter.
As aggregate interest increased, key hedge funds have jumped into Devon Energy Corp (NYSE:DVN) headfirst. Zimmer Partners, managed by Stuart J. Zimmer, initiated the most outsized position in Devon Energy Corp (NYSE:DVN). Zimmer Partners had $82.3 million invested in the company at the end of the first quarter. Jim Simons’ Renaissance Technologies also initiated a $45.6 million position during the quarter. The following funds were also among the new DVN investors: Till Bechtolsheimer’s Arosa Capital Management, Mark Kingdon’s Kingdon Capital, and Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Devon Energy Corp (NYSE:DVN) but similarly valued. These stocks are Citrix Systems, Inc. (NASDAQ:CTXS), Tractor Supply Company (NASDAQ:TSCO), Rockwell Collins, Inc. (NYSE:COL), and Williams Companies, Inc. (NYSE:WMB). This group of stocks’ market valuations match DVN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTXS | 40 | 1440245 | -5 |
| TSCO | 28 | 450447 | 7 |
| COL | 18 | 120387 | 1 |
| WMB | 52 | 2272785 | -7 |
As you can see these stocks had an average of 34.5 hedge funds with bullish positions and the average amount invested in these stocks was $1071 million. That figure was $1414 million in DVN’s case. Williams Companies, Inc. (NYSE:WMB) is the most popular stock in this table. On the other hand Rockwell Collins, Inc. (NYSE:COL) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Devon Energy Corp (NYSE:DVN) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
