Where Do Hedge Funds Stand On Battalion Oil Corporation (BATL)?

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Battalion Oil Corporation (NYSE:BATL).

Is Battalion Oil Corporation (NYSE:BATL) a bargain? The best stock pickers were betting on the stock. The number of bullish hedge fund bets improved by 1 lately. Battalion Oil Corporation (NYSE:BATL) was in 5 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 5. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BATL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 4 hedge funds in our database with BATL holdings at the end of December.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Didric Cederholm of Lion Point Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. Now we’re going to view the latest hedge fund action encompassing Battalion Oil Corporation (NYSE:BATL).

Do Hedge Funds Think BATL Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from one quarter earlier. By comparison, 5 hedge funds held shares or bullish call options in BATL a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Battalion Oil Corporation (NYSE:BATL) was held by Luminus Management, which reported holding $66.9 million worth of stock at the end of December. It was followed by Oaktree Capital Management with a $32.7 million position. Other investors bullish on the company included Lion Point, Arbiter Partners Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position Luminus Management allocated the biggest weight to Battalion Oil Corporation (NYSE:BATL), around 12.87% of its 13F portfolio. Lion Point is also relatively very bullish on the stock, setting aside 1.85 percent of its 13F equity portfolio to BATL.

As aggregate interest increased, key money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, initiated the biggest position in Battalion Oil Corporation (NYSE:BATL). Millennium Management had $0.1 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Battalion Oil Corporation (NYSE:BATL) but similarly valued. These stocks are OncoSec Medical Incorporated (NASDAQ:ONCS), Voyager Therapeutics, Inc. (NASDAQ:VYGR), Protara Therapeutics, Inc. (NASDAQ:TARA), Calithera Biosciences Inc (NASDAQ:CALA), NACCO Industries, Inc. (NYSE:NC), Alaska Communications Systems Group Inc (NASDAQ:ALSK), and Assembly Biosciences Inc (NASDAQ:ASMB). This group of stocks’ market valuations match BATL’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.3 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $110 million in BATL’s case. Assembly Biosciences Inc (NASDAQ:ASMB) is the most popular stock in this table. On the other hand NACCO Industries, Inc. (NYSE:NC) is the least popular one with only 2 bullish hedge fund positions. Battalion Oil Corporation (NYSE:BATL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BATL is 46.7. 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 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 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. A small number of hedge funds were also right about betting on BATL as the stock returned 21% since the end of the first quarter (through 6/18) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.