The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 887 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2020. What do these smart investors think about NOV Inc. (NYSE:NOV)?
Is NOV stock a buy? The best stock pickers were becoming less hopeful. The number of bullish hedge fund positions were trimmed by 4 in recent months. NOV Inc. (NYSE:NOV) was in 29 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 33. Our calculations also showed that NOV isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 124 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Crispin Odey of Odey Asset Management Group
With all of this in mind let’s view the new hedge fund action encompassing NOV Inc. (NYSE:NOV).
Do Hedge Funds Think NOV Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from one quarter earlier. By comparison, 31 hedge funds held shares or bullish call options in NOV a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Pzena Investment Management was the largest shareholder of NOV Inc. (NYSE:NOV), with a stake worth $542.7 million reported as of the end of December. Trailing Pzena Investment Management was Oldfield Partners, which amassed a stake valued at $104.2 million. Balyasny Asset Management, Renaissance Technologies, and D E Shaw 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 Mountain Lake Investment Management allocated the biggest weight to NOV Inc. (NYSE:NOV), around 6.36% of its 13F portfolio. Oldfield Partners is also relatively very bullish on the stock, earmarking 4.99 percent of its 13F equity portfolio to NOV.
Since NOV Inc. (NYSE:NOV) has faced bearish sentiment from the smart money, logic holds that there lies a certain “tier” of funds that slashed their positions entirely last quarter. Intriguingly, John W. Rogers’s Ariel Investments sold off the largest stake of the 750 funds tracked by Insider Monkey, valued at about $14.3 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund dropped about $7.1 million worth. These moves are interesting, as total hedge fund interest dropped by 4 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to NOV Inc. (NYSE:NOV). These stocks are KT Corporation (NYSE:KT), Cameco Corporation (NYSE:CCJ), WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC), MDU Resources Group Inc (NYSE:MDU), Ingredion Incorporated (NYSE:INGR), Marathon Oil Corporation (NYSE:MRO), and Primerica, Inc. (NYSE:PRI). This group of stocks’ market caps match NOV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KT | 11 | 122793 | 1 |
| CCJ | 25 | 394024 | 5 |
| WSC | 35 | 900160 | -1 |
| MDU | 20 | 150898 | -3 |
| INGR | 24 | 419950 | 1 |
| MRO | 26 | 317417 | 10 |
| PRI | 31 | 468219 | -4 |
| Average | 24.6 | 396209 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.6 hedge funds with bullish positions and the average amount invested in these stocks was $396 million. That figure was $932 million in NOV’s case. WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) is the most popular stock in this table. On the other hand KT Corporation (NYSE:KT) is the least popular one with only 11 bullish hedge fund positions. NOV Inc. (NYSE:NOV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NOV is 64.9. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and beat the market again by 1.5 percentage points. Unfortunately NOV wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on NOV were disappointed as the stock returned -4.2% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
