Is Devon Energy Corporation (NYSE:DVN) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is DVN a good stock to buy? Devon Energy Corporation (NYSE:DVN) investors should pay attention to an increase in hedge fund sentiment lately. Devon Energy Corporation (NYSE:DVN) was in 52 hedge funds’ portfolios at the end of March. The all time high for this statistic is 61. There were 45 hedge funds in our database with DVN holdings at the end of December. Our calculations also showed that DVN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are numerous tools market participants employ to appraise stocks. Some of the most innovative tools are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can beat their index-focused peers by a significant amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Phillip Gross of Adage Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s review the fresh hedge fund action surrounding Devon Energy Corporation (NYSE:DVN).
Do Hedge Funds Think DVN Is A Good Stock To Buy Now?
At first quarter’s end, a total of 52 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DVN over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Phill Gross and Robert Atchinson’s Adage Capital Management has the most valuable position in Devon Energy Corporation (NYSE:DVN), worth close to $248 million, accounting for 0.5% of its total 13F portfolio. On Adage Capital Management’s heels is Israel Englander of Millennium Management, with a $132.7 million position; 0.1% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions contain Paul Marshall and Ian Wace’s Marshall Wace LLP, Alex Duran and Scott Hendrickson’s Permian Investment Partners and Zach Schreiber’s Point State Capital. In terms of the portfolio weights assigned to each position Permian Investment Partners allocated the biggest weight to Devon Energy Corporation (NYSE:DVN), around 14.1% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, setting aside 7.57 percent of its 13F equity portfolio to DVN.
Consequently, key money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most outsized position in Devon Energy Corporation (NYSE:DVN). Marshall Wace LLP had $119.2 million invested in the company at the end of the quarter. Alex Duran and Scott Hendrickson’s Permian Investment Partners also initiated a $113.2 million position during the quarter. The other funds with new positions in the stock are Leon Cooperman’s Omega Advisors, Todd J. Kantor’s Encompass Capital Advisors, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s also examine hedge fund activity in other stocks similar to Devon Energy Corporation (NYSE:DVN). We will take a look at Ares Management Corp (NYSE:ARES), Cognex Corporation (NASDAQ:CGNX), Lumen Technologies, Inc. (NYSE:LUMN), News Corp (NASDAQ:NWS), News Corp (NASDAQ:NWSA), Charles River Laboratories International Inc. (NYSE:CRL), and Wynn Resorts, Limited (NASDAQ:WYNN). This group of stocks’ market caps are closest to DVN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARES | 16 | 565174 | -4 |
| CGNX | 34 | 498509 | 3 |
| LUMN | 32 | 1004948 | 3 |
| NWS | 21 | 168400 | 10 |
| NWSA | 35 | 1235000 | 3 |
| CRL | 42 | 1118745 | -1 |
| WYNN | 49 | 1074268 | -3 |
| Average | 32.7 | 809292 | 1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.7 hedge funds with bullish positions and the average amount invested in these stocks was $809 million. That figure was $1466 million in DVN’s case. Wynn Resorts, Limited (NASDAQ:WYNN) is the most popular stock in this table. On the other hand Ares Management Corp (NYSE:ARES) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Devon Energy Corporation (NYSE:DVN) is more popular among hedge funds. Our overall hedge fund sentiment score for DVN is 85.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 17.2% in 2021 through June 11th but still managed to beat the market by 3.3 percentage points. Hedge funds were also right about betting on DVN as the stock returned 35.6% since the end of March (through 6/11) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
