At the end of February we announced the arrival of the first US recession since 2009 and we predicted 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 Penn Virginia Corporation (NASDAQ:PVAC).
Penn Virginia Corporation (NASDAQ:PVAC) has experienced an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that PVAC 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.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to review the recent hedge fund action regarding Penn Virginia Corporation (NASDAQ:PVAC).
How have hedgies been trading Penn Virginia Corporation (NASDAQ:PVAC)?
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PVAC over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Mangrove Partners held the most valuable stake in Penn Virginia Corporation (NASDAQ:PVAC), which was worth $5.3 million at the end of the third quarter. On the second spot was Strategic Value Partners which amassed $4.3 million worth of shares. 683 Capital Partners, Silver Point Capital, and Contrarian Capital 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 Strategic Value Partners allocated the biggest weight to Penn Virginia Corporation (NASDAQ:PVAC), around 1.35% of its 13F portfolio. Mangrove Partners is also relatively very bullish on the stock, dishing out 0.74 percent of its 13F equity portfolio to PVAC.
Consequently, key hedge funds have been driving this bullishness. Paloma Partners, managed by Donald Sussman, created the largest position in Penn Virginia Corporation (NASDAQ:PVAC). Paloma Partners had $0 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $0 million position during the quarter. The only other fund with a new position in the stock is Matthew Hulsizer’s PEAK6 Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Penn Virginia Corporation (NASDAQ:PVAC) but similarly valued. We will take a look at Vista Gold Corp. (NYSE:VGZ), Richardson Electronics, Ltd. (NASDAQ:RELL), JMP Group LLC (NYSE:JMP), and Southwest Georgia Financial Corporation (NYSE:SGB). All of these stocks’ market caps match PVAC’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.75 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $21 million in PVAC’s case. Richardson Electronics, Ltd. (NASDAQ:RELL) is the most popular stock in this table. On the other hand JMP Group LLC (NYSE:JMP) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Penn Virginia Corporation (NASDAQ:PVAC) is more popular among hedge funds. 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 returned 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on PVAC as the stock returned 228.2% so far in Q2 (through June 25th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.