Did Hedge Funds Make The Right Call On Ovintiv Inc. (OVV) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtOvintiv Inc. (NYSE:OVV) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Ovintiv Inc. (NYSE:OVV) investors should be aware of a decrease in support from the world’s most elite money managers of late. OVV was in 19 hedge funds’ portfolios at the end of March. There were 23 hedge funds in our database with OVV positions at the end of the previous quarter. Our calculations also showed that OVV isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Paul Tudor Jones of Tudor Investment Corp

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind we’re going to review the fresh hedge fund action encompassing Ovintiv Inc. (NYSE:OVV).

How have hedgies been trading Ovintiv Inc. (NYSE:OVV)?

Heading into the second quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards OVV over the last 18 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

Among these funds, Millennium Management held the most valuable stake in Ovintiv Inc. (NYSE:OVV), which was worth $8.3 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $7.8 million worth of shares. Renaissance Technologies, Marshall Wace LLP, and Alyeska Investment Group 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 Contrarius Investment Management allocated the biggest weight to Ovintiv Inc. (NYSE:OVV), around 0.14% of its 13F portfolio. Lion Point is also relatively very bullish on the stock, setting aside 0.06 percent of its 13F equity portfolio to OVV.

Seeing as Ovintiv Inc. (NYSE:OVV) has faced a decline in interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of funds who sold off their entire stakes in the first quarter. At the top of the heap, D. E. Shaw’s D E Shaw said goodbye to the largest investment of all the hedgies monitored by Insider Monkey, valued at close to $3.8 million in stock, and Phill Gross and Robert Atchinson’s Adage Capital Management was right behind this move, as the fund said goodbye to about $3 million worth. These transactions are interesting, as total hedge fund interest fell by 4 funds in the first quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ovintiv Inc. (NYSE:OVV) but similarly valued. These stocks are Cytokinetics, Inc. (NASDAQ:CYTK), International Seaways, Inc. (NYSE:INSW), Talend S.A. (NASDAQ:TLND), and Third Point Reinsurance Ltd (NYSE:TPRE). This group of stocks’ market values are similar to OVV’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CYTK 22 206499 2
INSW 27 169817 5
TLND 29 332515 5
TPRE 17 40013 -3
Average 23.75 187211 2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $187 million. That figure was $27 million in OVV’s case. Talend S.A. (NASDAQ:TLND) is the most popular stock in this table. On the other hand Third Point Reinsurance Ltd (NYSE:TPRE) is the least popular one with only 17 bullish hedge fund positions. Ovintiv Inc. (NYSE:OVV) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. A small number of hedge funds were also right about betting on OVV as the stock returned 315.7% since the end of March and outperformed the market by an even larger margin.

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