Where Do Hedge Funds Stand On VAALCO Energy, Inc. (EGY)?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on VAALCO Energy, Inc. (NYSE:EGY).

VAALCO Energy, Inc. (NYSE:EGY) has seen a decrease in hedge fund sentiment in recent months. VAALCO Energy, Inc. (NYSE:EGY) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic is 10. There were 7 hedge funds in our database with EGY holdings at the end of December. Our calculations also showed that EGY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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.

Fred DiSanto of Ancora Advisors

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 $24 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 fresh hedge fund action surrounding VAALCO Energy, Inc. (NYSE:EGY).

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

Heading into the second quarter of 2021, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the fourth quarter of 2020. By comparison, 9 hedge funds held shares or bullish call options in EGY a year ago. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in VAALCO Energy, Inc. (NYSE:EGY), which was worth $8 million at the end of the fourth quarter. On the second spot was Ancora Advisors which amassed $2 million worth of shares. Arrowstreet Capital, Millennium Management, and Two Sigma Advisors 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 Ancora Advisors allocated the biggest weight to VAALCO Energy, Inc. (NYSE:EGY), around 0.06% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to EGY.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Winton Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).

Let’s go over hedge fund activity in other stocks similar to VAALCO Energy, Inc. (NYSE:EGY). These stocks are PC Tel Inc (NASDAQ:PCTI), Cidara Therapeutics Inc (NASDAQ:CDTX), S&W Seed Company (NASDAQ:SANW), Meten EdtechX Education Group Ltd. (NASDAQ:METX), Eyenovia, Inc. (NASDAQ:EYEN), Inmune Bio Inc. (NASDAQ:INMB), and Venus Concept Inc. (NASDAQ:VERO). This group of stocks’ market values match EGY’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.9 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $12 million in EGY’s case. PC Tel Inc (NASDAQ:PCTI) is the most popular stock in this table. On the other hand Meten EdtechX Education Group Ltd. (NASDAQ:METX) is the least popular one with only 2 bullish hedge fund positions. VAALCO Energy, Inc. (NYSE:EGY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EGY is 47. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on EGY as the stock returned 56.3% since the end of Q1 (through 6/25) 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.