Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Valero Energy Corporation (NYSE:VLO), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Valero Energy Corporation (NYSE:VLO) has seen a decrease in hedge fund sentiment in recent months. Valero Energy Corporation (NYSE:VLO) was in 32 hedge funds’ portfolios at the end of September. The all time high for this statistic is 56. Our calculations also showed that VLO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind we’re going to take a look at the new hedge fund action regarding Valero Energy Corporation (NYSE:VLO).
Do Hedge Funds Think VLO Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from the previous quarter. On the other hand, there were a total of 38 hedge funds with a bullish position in VLO a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in Valero Energy Corporation (NYSE:VLO) was held by Citadel Investment Group, which reported holding $122.1 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $71.2 million position. Other investors bullish on the company included PEAK6 Capital Management, Schonfeld Strategic Advisors, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Solus Alternative Asset Management allocated the biggest weight to Valero Energy Corporation (NYSE:VLO), around 3.32% of its 13F portfolio. Bourgeon Capital is also relatively very bullish on the stock, dishing out 2.17 percent of its 13F equity portfolio to VLO.
Due to the fact that Valero Energy Corporation (NYSE:VLO) has faced falling interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of hedge funds that elected to cut their full holdings by the end of the third quarter. At the top of the heap, Paul Singer’s Elliott Investment Management cut the biggest investment of the “upper crust” of funds watched by Insider Monkey, comprising about $156.2 million in stock, and Vince Maddi and Shawn Brennan’s SIR Capital Management was right behind this move, as the fund said goodbye to about $35.4 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 6 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Valero Energy Corporation (NYSE:VLO) but similarly valued. These stocks are Orange SA (NYSE:ORAN), Tyson Foods, Inc. (NYSE:TSN), AMETEK, Inc. (NYSE:AME), Genmab A/S (NASDAQ:GMAB), Stanley Black & Decker, Inc. (NYSE:SWK), Chewy, Inc. (NYSE:CHWY), and United Microelectronics Corp (NYSE:UMC). This group of stocks’ market values are closest to VLO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ORAN | 3 | 20523 | 0 |
| TSN | 33 | 865195 | 0 |
| AME | 38 | 1320239 | 0 |
| GMAB | 9 | 122715 | 0 |
| SWK | 37 | 776002 | -7 |
| CHWY | 32 | 376172 | -11 |
| UMC | 13 | 151038 | 3 |
| Average | 23.6 | 518841 | -2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.6 hedge funds with bullish positions and the average amount invested in these stocks was $519 million. That figure was $289 million in VLO’s case. AMETEK, Inc. (NYSE:AME) is the most popular stock in this table. On the other hand Orange SA (NYSE:ORAN) is the least popular one with only 3 bullish hedge fund positions. Valero Energy Corporation (NYSE:VLO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VLO is 57.6. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately VLO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VLO were disappointed as the stock returned -3.9% since the end of September (through 11/30) 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 many of these stocks already outperformed the market since 2019.
Follow Valero Energy Corp (NYSE:VLO)
Follow Valero Energy Corp (NYSE:VLO)
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Disclosure: None. This article was originally published at Insider Monkey.
