Is Vermilion Energy Inc (NYSE:VET) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Vermilion Energy Inc (NYSE:VET) investors should be aware of a decrease in enthusiasm from smart money in recent months, which should not come as a surprise, as the shares of the company were down 25.56% during the third quarter. Vermilion Energy Inc (NYSE:VET) was in 6 hedge funds’ portfolios at the end of the third quarter of 2015. There were 8 hedge funds in our database with Vermilion Energy Inc (NYSE:VET) positions at the end of the previous quarter. A slightly bullish outlook from the hedgies prompted us to find out more about the hedge funds holding positions in the company.
For an in-depth understanding of hedge fund behavior towards the market, we will also compare Vermilion Energy Inc (NYSE:VET) to other stocks, including Equity Commonwealth (NYSE:EQC), Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), and Office Depot Inc (NASDAQ:ODP) to get a better sense of its popularity.
If you’d ask most shareholders, hedge funds are perceived as underperforming, old financial tools of yesteryear. While there are greater than 8000 funds trading at present, Our researchers look at the leaders of this group, about 700 funds. These investment experts orchestrate bulk of the smart money’s total asset base, and by watching their top equity investments, Insider Monkey has unearthed numerous investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, we’re going to take a peek at the new action regarding Vermilion Energy Inc (NYSE:VET).
How have hedgies been trading Vermilion Energy Inc (NYSE:VET)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a decline of 25% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, BlueCrest Capital Mgmt., managed by Michael Platt and William Reeves, holds the biggest position in Vermilion Energy Inc (NYSE:VET). BlueCrest Capital Mgmt. has a $4.3 million position in the stock, comprising 0.1% of its 13F portfolio. On BlueCrest Capital Mgmt.’s heels is Lucas Capital Management, managed by Russell Lucas, which holds a $1.6 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish encompass Cliff Asness’ AQR Capital Management, Renaissance Technologies, and Israel Englander’s Millennium Management.
Seeing as Vermilion Energy Inc (NYSE:VET) has witnessed a falling interest from the aggregate hedge fund industry, we can see that there lies a certain “tier” of hedge funds that slashed their full holdings heading into Q4. At the top of the heap, D E Shaw cut the biggest position of the 700 funds tracked by Insider Monkey, totaling close to $2.7 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also dumped its stock, about $0.2 million worth of shares. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Vermilion Energy Inc (NYSE:VET) but similarly valued. We will take a look at Equity Commonwealth (NYSE:EQC), Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), Office Depot Inc (NASDAQ:ODP), and Clovis Oncology Inc (NASDAQ:CLVS). This group of stocks’ market valuations match Vermilion Energy Inc (NYSE:VET)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EQC | 28 | 584268 | -5 |
| CBRL | 19 | 84850 | -3 |
| ODP | 47 | 964831 | -2 |
| CLVS | 31 | 1216090 | 2 |
As you can see, these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $713 million. That figure was $9 million in Vermilion Energy Inc (NYSE:VET)’s case. Office Depot Inc (NASDAQ:ODP) is the most popular stock in this table. On the other hand, Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks, Vermilion Energy Inc (NYSE:VET) is even less popular than Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.
