The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Transocean Ltd (NYSE:RIG).
Is RIG a good stock to buy? Investors who are in the know were becoming more confident. The number of bullish hedge fund positions advanced by 7 lately. Transocean Ltd (NYSE:RIG) was in 27 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 42. Our calculations also showed that RIG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
At Insider Monkey, we scour multiple sources to uncover 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 EV 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. With all of this in mind let’s review the latest hedge fund action surrounding Transocean Ltd (NYSE:RIG).
Do Hedge Funds Think RIG Is A Good Stock To Buy Now?
At the end of June, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 35% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RIG over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Transocean Ltd (NYSE:RIG) was held by D E Shaw, which reported holding $113.5 million worth of stock at the end of June. It was followed by Two Sigma Advisors with a $48.3 million position. Other investors bullish on the company included Millennium Management, Key Square Capital Management, and Discovery Capital Management. In terms of the portfolio weights assigned to each position Avenue Capital allocated the biggest weight to Transocean Ltd (NYSE:RIG), around 4.5% of its 13F portfolio. Key Square Capital Management is also relatively very bullish on the stock, earmarking 4.41 percent of its 13F equity portfolio to RIG.
As aggregate interest increased, some big names were breaking ground themselves. Key Square Capital Management, managed by Scott Bessent, initiated the most valuable position in Transocean Ltd (NYSE:RIG). Key Square Capital Management had $23.3 million invested in the company at the end of the quarter. Mark Coe’s Intrinsic Edge Capital also initiated a $3.4 million position during the quarter. The following funds were also among the new RIG investors: Israel Englander’s Millennium Management, Matthew Hulsizer’s PEAK6 Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now take a look at hedge fund activity in other stocks similar to Transocean Ltd (NYSE:RIG). These stocks are Wolverine World Wide, Inc. (NYSE:WWW), Herman Miller, Inc. (NASDAQ:MLHR), Matson Inc. (NYSE:MATX), Cactus, Inc. (NYSE:WHD), United Community Banks Inc (NASDAQ:UCBI), Baozun Inc (NASDAQ:BZUN), and PureCycle Technologies, Inc. (NASDAQ:PCT). This group of stocks’ market values are closest to RIG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WWW | 21 | 162511 | 5 |
| MLHR | 23 | 224828 | 5 |
| MATX | 14 | 30657 | -5 |
| WHD | 14 | 109617 | -6 |
| UCBI | 13 | 33685 | 2 |
| BZUN | 8 | 21760 | -3 |
| PCT | 22 | 637995 | 1 |
| Average | 16.4 | 174436 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.4 hedge funds with bullish positions and the average amount invested in these stocks was $174 million. That figure was $313 million in RIG’s case. Herman Miller, Inc. (NASDAQ:MLHR) is the most popular stock in this table. On the other hand Baozun Inc (NASDAQ:BZUN) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Transocean Ltd (NYSE:RIG) is more popular among hedge funds. Our overall hedge fund sentiment score for RIG is 79.3. 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 gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Unfortunately RIG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RIG were disappointed as the stock returned -11.3% since the end of the second quarter (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Transocean Ltd. (NYSE:RIG)
Follow Transocean Ltd. (NYSE:RIG)
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Disclosure: None. This article was originally published at Insider Monkey.
