Do Hedge Funds Love Devon Energy Corporation (DVN)?

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Devon Energy Corporation (NYSE:DVN).

Devon Energy Corporation (NYSE:DVN) has seen a decrease in support from the world’s most elite money managers in recent months. Devon Energy Corporation (NYSE:DVN) was in 48 hedge funds’ portfolios at the end of September. The all time high for this statistic is 61. There were 50 hedge funds in our database with DVN positions at the end of the second quarter. Our calculations also showed that DVN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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 let’s take a gander at the key hedge fund action encompassing Devon Energy Corporation (NYSE:DVN).

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

Heading into the fourth quarter of 2021, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DVN over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, GQG Partners was the largest shareholder of Devon Energy Corporation (NYSE:DVN), with a stake worth $494 million reported as of the end of September. Trailing GQG Partners was Permian Investment Partners, which amassed a stake valued at $220.1 million. Fisher Asset Management, Omega Advisors, and Impala Asset Management 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 Permian Investment Partners allocated the biggest weight to Devon Energy Corporation (NYSE:DVN), around 21.85% of its 13F portfolio. Key Square Capital Management is also relatively very bullish on the stock, setting aside 7.27 percent of its 13F equity portfolio to DVN.

Judging by the fact that Devon Energy Corporation (NYSE:DVN) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there exists a select few fund managers who were dropping their full holdings last quarter. It’s worth mentioning that Todd J. Kantor’s Encompass Capital Advisors cut the biggest stake of all the hedgies followed by Insider Monkey, valued at about $41.6 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also cut its stock, about $13.5 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Devon Energy Corporation (NYSE:DVN) but similarly valued. We will take a look at ZoomInfo Technologies Inc. (NASDAQ:ZI), Caesars Entertainment Inc. (NASDAQ:CZR), Credit Suisse Group AG (NYSE:CS), Rogers Communications Inc. (NYSE:RCI), Splunk Inc (NASDAQ:SPLK), Tractor Supply Company (NASDAQ:TSCO), and Fox Corporation (NASDAQ:FOXA). This group of stocks’ market valuations are similar to DVN’s market valuation.

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As you can see these stocks had an average of 36.9 hedge funds with bullish positions and the average amount invested in these stocks was $1053 million. That figure was $1401 million in DVN’s case. Caesars Entertainment Inc. (NASDAQ:CZR) is the most popular stock in this table. On the other hand Credit Suisse Group AG (NYSE:CS) is the least popular one with only 8 bullish hedge fund positions. Devon Energy Corporation (NYSE:DVN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DVN is 62.3. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on DVN as the stock returned 18.4% since the end of Q3 (through 11/30) 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.