Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Valaris Plc (NYSE:VAL).
Is Valaris Plc (NYSE:VAL) a buy right now? The best stock pickers are turning less bullish. The number of bullish hedge fund bets shrunk by 6 lately. Our calculations also showed that VAL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). VAL was in 14 hedge funds’ portfolios at the end of the first quarter of 2020. There were 20 hedge funds in our database with VAL holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors put to use to grade publicly traded companies. A pair of the most under-the-radar tools are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the top fund managers can outclass the S&P 500 by a solid amount (see the details here).
Crispin Odey of Odey Asset Management Group
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 easiest remote jobs that pay well to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the key hedge fund action encompassing Valaris Plc (NYSE:VAL).
How are hedge funds trading Valaris Plc (NYSE:VAL)?
At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -30% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VAL over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Luminus Management held the most valuable stake in Valaris Plc (NYSE:VAL), which was worth $16.6 million at the end of the third quarter. On the second spot was Contrarius Investment Management which amassed $8.7 million worth of shares. Shah Capital Management, Odey Asset Management Group, and Pzena Investment Management 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 Shah Capital Management allocated the biggest weight to Valaris Plc (NYSE:VAL), around 2.74% of its 13F portfolio. Luminus Management is also relatively very bullish on the stock, dishing out 1.72 percent of its 13F equity portfolio to VAL.
Since Valaris Plc (NYSE:VAL) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there is a sect of money managers who sold off their positions entirely last quarter. At the top of the heap, Ken Fisher’s Fisher Asset Management said goodbye to the biggest stake of all the hedgies followed by Insider Monkey, worth about $8.4 million in stock, and William B. Gray’s Orbis Investment Management was right behind this move, as the fund dumped about $6.9 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 6 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Valaris Plc (NYSE:VAL) but similarly valued. We will take a look at SB Financial Group, Inc. (NASDAQ:SBFG), Alithya Group inc. (NASDAQ:ALYA), Exantas Capital Corp. (NYSE:XAN), and Marker Therapeutics, Inc. (NASDAQ:MRKR). This group of stocks’ market caps resemble VAL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SBFG | 4 | 8846 | 0 |
| ALYA | 5 | 7426 | 0 |
| XAN | 11 | 14181 | -5 |
| MRKR | 5 | 3475 | -1 |
| Average | 6.25 | 8482 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $38 million in VAL’s case. Exantas Capital Corp. (NYSE:XAN) is the most popular stock in this table. On the other hand SB Financial Group, Inc. (NASDAQ:SBFG) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Valaris Plc (NYSE:VAL) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on VAL as the stock returned 70.1% so far in Q2 (through June 25th) 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.
