Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze Penn West Petroleum Ltd (USA) (NYSE:PWE) from the perspective of those successful funds.
Is Penn West Petroleum Ltd (USA) (NYSE:PWE) a buy right now? Prominent investors are altogether turning bullish. The number of long hedge fund investments strengthened by 1 recently. There were 12 hedge funds in our database with PWE positions at the end of the previous quarter. 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 General American Investors Co. Inc. (NYSE:GAM), Capstead Mortgage Corporation (NYSE:CMO), and Nordic American Tanker Ltd (NYSE:NAT) to gather more data points.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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With all of this in mind, let’s check out the new action encompassing Penn West Petroleum Ltd (USA) (NYSE:PWE).
How are hedge funds trading Penn West Petroleum Ltd (USA) (NYSE:PWE)?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in PWE at the beginning of this year. So, let’s check out 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, FrontFour Capital Group, led by Stephen Loukas, David A. Lorber, Zachary George, holds the largest position in Penn West Petroleum Ltd (USA) (NYSE:PWE). FrontFour Capital Group has a $29 million position in the stock, comprising 6.8% of its 13F portfolio. Sitting at the No. 2 spot is Youlia Miteva of Proxima Capital Management, with a $6.9 million position; 3.1% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish comprise Curtis Schenker and Craig Effron’s Scoggin, Jim Simons’s Renaissance Technologies, one of the largest hedge funds in the world, and Thomas E. Claugus’s GMT Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now, key hedge funds have jumped into Penn West Petroleum Ltd (USA) (NYSE:PWE) headfirst. Israel Englander’s Millennium Management assembled the most outsized position in Penn West Petroleum Ltd (USA) (NYSE:PWE). Millennium Management had $0.6 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.1 million position during the quarter. The following funds were also among the new PWE investors: John Overdeck and David Siegel’s Two Sigma Advisors and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s check out hedge fund activity in other stocks similar to Penn West Petroleum Ltd (USA) (NYSE:PWE). These stocks are General American Investors Co. Inc. (NYSE:GAM), Capstead Mortgage Corporation (NYSE:CMO), Nordic American Tanker Ltd (NYSE:NAT), and Monotype Imaging Holdings Inc. (NASDAQ:TYPE). This group of stocks’ market valuations are similar to PWE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GAM | 4 | 15051 | 4 |
| CMO | 9 | 36287 | -2 |
| NAT | 13 | 67747 | 0 |
| TYPE | 20 | 95672 | 3 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $49 million in PWE’s case. Monotype Imaging Holdings Inc. (NASDAQ:TYPE) is the most popular stock in this table. On the other hand General American Investors Co. Inc. (NYSE:GAM) is the least popular one with only 4 bullish hedge fund positions. Penn West Petroleum Ltd (USA) (NYSE:PWE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TYPE might be a better candidate to consider taking a long position in.
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