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Hedge Funds Cashing Out Of National Oilwell Varco, Inc. (NOV)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded National Oilwell Varco, Inc. (NYSE:NOV) based on those filings.

National Oilwell Varco, Inc. (NYSE:NOV) shareholders have witnessed a decrease in enthusiasm from smart money recently. NOV was in 29 hedge funds’ portfolios at the end of March. There were 31 hedge funds in our database with NOV positions at the end of the previous quarter. Our calculations also showed that NOV 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.

In the financial world there are numerous formulas stock traders employ to assess their stock investments. A couple of the less utilized formulas are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the elite fund managers can outpace the S&P 500 by a superb amount (see the details here).

Richard Pzena - Pzena Investment Management

Richard S. Pzena of Pzena Investment Management

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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 key hedge fund action surrounding National Oilwell Varco, Inc. (NYSE:NOV).

How have hedgies been trading National Oilwell Varco, Inc. (NYSE:NOV)?

At Q1’s end, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NOV over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in National Oilwell Varco, Inc. (NYSE:NOV) was held by Pzena Investment Management, which reported holding $312.8 million worth of stock at the end of September. It was followed by Oldfield Partners with a $48.8 million position. Other investors bullish on the company included Ariel Investments, Millennium Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Oldfield Partners allocated the biggest weight to National Oilwell Varco, Inc. (NYSE:NOV), around 6.18% of its 13F portfolio. Mountain Lake Investment Management is also relatively very bullish on the stock, earmarking 5.01 percent of its 13F equity portfolio to NOV.

Seeing as National Oilwell Varco, Inc. (NYSE:NOV) has experienced bearish sentiment from hedge fund managers, we can see that there were a few hedge funds that elected to cut their positions entirely in the first quarter. Intriguingly, Brandon Haley’s Holocene Advisors cut the largest stake of the 750 funds tracked by Insider Monkey, comprising close to $10.1 million in stock. Sara Nainzadeh’s fund, Centenus Global Management, also sold off its stock, about $3.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds in the first quarter.

Let’s now take a look at hedge fund activity in other stocks similar to National Oilwell Varco, Inc. (NYSE:NOV). These stocks are AppFolio Inc (NASDAQ:APPF), Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), Integra Lifesciences Holdings Corp (NASDAQ:IART), and Healthcare Realty Trust Inc (NYSE:HR). All of these stocks’ market caps resemble NOV’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
APPF 19 272296 3
IOVA 39 1344741 7
IART 22 106793 5
HR 11 37769 -1
Average 22.75 440400 3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $440 million. That figure was $476 million in NOV’s case. Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is the most popular stock in this table. On the other hand Healthcare Realty Trust Inc (NYSE:HR) is the least popular one with only 11 bullish hedge fund positions. National Oilwell Varco, Inc. (NYSE:NOV) is not the most popular stock in this group but hedge fund interest is still above 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on NOV as the stock returned 26.9% in Q2 (through the end of May) 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.