In this article we will take a look at whether hedge funds think Valvoline Inc. (NYSE:VVV) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is VVV stock a buy? Valvoline Inc. (NYSE:VVV) shareholders have witnessed a decrease in support from the world’s most elite money managers lately. Valvoline Inc. (NYSE:VVV) was in 27 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 40. Our calculations also showed that VVV isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Ricky Sandler of Eminence Capital
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Do Hedge Funds Think VVV Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from one quarter earlier. By comparison, 27 hedge funds held shares or bullish call options in VVV a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Valvoline Inc. (NYSE:VVV), which was worth $114.8 million at the end of the fourth quarter. On the second spot was HG Vora Capital Management which amassed $109.9 million worth of shares. Eminence Capital, Tensile Capital, 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 Tensile Capital allocated the biggest weight to Valvoline Inc. (NYSE:VVV), around 8.58% of its 13F portfolio. HG Vora Capital Management is also relatively very bullish on the stock, setting aside 8.52 percent of its 13F equity portfolio to VVV.
Because Valvoline Inc. (NYSE:VVV) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there were a few hedgies that decided to sell off their full holdings in the fourth quarter. It’s worth mentioning that John Smith Clark’s Southpoint Capital Advisors said goodbye to the biggest investment of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $14.5 million in stock, and Steven Tananbaum’s GoldenTree Asset Management was right behind this move, as the fund said goodbye to about $12.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 8 funds in the fourth quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Valvoline Inc. (NYSE:VVV) but similarly valued. These stocks are The Hanover Insurance Group, Inc. (NYSE:THG), Inari Medical, Inc. (NASDAQ:NARI), MGIC Investment Corporation (NYSE:MTG), Axis Capital Holdings Limited (NYSE:AXS), Chart Industries, Inc. (NASDAQ:GTLS), Eagle Materials, Inc. (NYSE:EXP), and Endava plc (NYSE:DAVA). This group of stocks’ market caps are similar to VVV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| THG | 20 | 136992 | -7 |
| NARI | 18 | 255700 | 4 |
| MTG | 27 | 260953 | -14 |
| AXS | 21 | 571642 | -2 |
| GTLS | 26 | 331167 | 6 |
| EXP | 37 | 377732 | 6 |
| DAVA | 10 | 162836 | -1 |
| Average | 22.7 | 299575 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $300 million. That figure was $556 million in VVV’s case. Eagle Materials, Inc. (NYSE:EXP) is the most popular stock in this table. On the other hand Endava plc (NYSE:DAVA) is the least popular one with only 10 bullish hedge fund positions. Valvoline Inc. (NYSE:VVV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VVV is 48.7. 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 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 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on VVV as the stock returned 23.2% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
