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Hedge Funds Aren’t Done Buying Euronav NV (EURN)

In this article we will take a look at whether hedge funds think Euronav NV (NYSE:EURN) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is Euronav NV (NYSE:EURN) going to take off soon? The smart money is getting more optimistic. The number of long hedge fund bets rose by 5 recently. Our calculations also showed that EURN 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). EURN was in 33 hedge funds’ portfolios at the end of the first quarter of 2020. There were 28 hedge funds in our database with EURN positions at the end of the previous quarter.

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

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Crispin Odey of Odey Asset Management Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. 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 let’s take a peek at the recent hedge fund action regarding Euronav NV (NYSE:EURN).

How have hedgies been trading Euronav NV (NYSE:EURN)?

At Q1’s end, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in EURN a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Euronav NV (NYSE:EURN) was held by Odey Asset Management Group, which reported holding $35.9 million worth of stock at the end of September. It was followed by Marshall Wace LLP with a $24.2 million position. Other investors bullish on the company included Huber Capital Management, Renaissance Technologies, and QVT Financial. In terms of the portfolio weights assigned to each position Odey Asset Management Group allocated the biggest weight to Euronav NV (NYSE:EURN), around 5.97% of its 13F portfolio. QVT Financial is also relatively very bullish on the stock, dishing out 4.93 percent of its 13F equity portfolio to EURN.

Now, some big names were breaking ground themselves. GoldenTree Asset Management, managed by Steven Tananbaum, established the most valuable position in Euronav NV (NYSE:EURN). GoldenTree Asset Management had $14 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $13.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Todd J. Kantor’s Encompass Capital Advisors, Jeff Osher’s No Street Capital, and Louis Bacon’s Moore Global Investments.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Euronav NV (NYSE:EURN) but similarly valued. These stocks are Allogene Therapeutics, Inc. (NASDAQ:ALLO), NovaGold Resources Inc. (NYSE:NG), Corelogic Inc (NYSE:CLGX), and Brady Corp (NYSE:BRC). All of these stocks’ market caps are closest to EURN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ALLO 12 101735 0
NG 19 297032 3
CLGX 31 253322 3
BRC 10 140433 -5
Average 18 198131 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $198 million. That figure was $236 million in EURN’s case. Corelogic Inc (NYSE:CLGX) is the most popular stock in this table. On the other hand Brady Corp (NYSE:BRC) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Euronav NV (NYSE:EURN) 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 gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately EURN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on EURN were disappointed as the stock returned -7.8% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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