With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter. One of these stocks was Valvoline Inc. (NYSE:VVV).
Valvoline Inc. (NYSE:VVV) investors should pay attention to an increase in support from the world’s most elite money managers of late. Our calculations also showed that VVV isn’t among the 30 most popular stocks among hedge funds.
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. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to review the new hedge fund action surrounding Valvoline Inc. (NYSE:VVV).
What have hedge funds been doing with Valvoline Inc. (NYSE:VVV)?
Heading into the first quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VVV over the last 14 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in Valvoline Inc. (NYSE:VVV) was held by Adage Capital Management, which reported holding $89.1 million worth of stock at the end of September. It was followed by Cardinal Capital with a $71.3 million position. Other investors bullish on the company included Tensile Capital, Balyasny Asset Management, and GAMCO Investors.
As aggregate interest increased, some big names have jumped into Valvoline Inc. (NYSE:VVV) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest position in Valvoline Inc. (NYSE:VVV). Balyasny Asset Management had $36.3 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also made a $4 million investment in the stock during the quarter. The other funds with brand new VVV positions are Noam Gottesman’s GLG Partners, Matthew Hulsizer’s PEAK6 Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks similar to Valvoline Inc. (NYSE:VVV). These stocks are Nexstar Media Group, Inc. (NASDAQ:NXST), The Wendy’s Company (NASDAQ:WEN), MSA Safety Incorporated (NYSE:MSA), and SLM Corp (NASDAQ:SLM). This group of stocks’ market values are closest to VVV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NXST | 34 | 975256 | -3 |
| WEN | 26 | 964697 | -1 |
| MSA | 17 | 78793 | 7 |
| SLM | 24 | 492797 | 5 |
| Average | 25.25 | 627886 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $628 million. That figure was $344 million in VVV’s case. Nexstar Media Group, Inc. (NASDAQ:NXST) is the most popular stock in this table. On the other hand MSA Safety Incorporated (NYSE:MSA) is the least popular one with only 17 bullish hedge fund positions. Valvoline Inc. (NYSE:VVV) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately VVV wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); VVV investors were disappointed as the stock returned -3.7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
