Is VAALCO Energy, Inc. (NYSE:EGY) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is VAALCO Energy, Inc. (NYSE:EGY) a buy here? Prominent investors are turning bullish. The number of long hedge fund bets increased by 2 lately. Our calculations also showed that EGY isn’t among the 30 most popular stocks among hedge funds.
According to most stock holders, hedge funds are perceived as underperforming, old financial tools of the past. While there are greater than 8000 funds trading at the moment, We hone in on the crème de la crème of this group, around 750 funds. These investment experts handle bulk of all hedge funds’ total asset base, and by keeping an eye on their top stock picks, Insider Monkey has determined many investment strategies that have historically outpaced the market. Insider Monkey’s flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points a year since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
Let’s go over the key hedge fund action regarding VAALCO Energy, Inc. (NYSE:EGY).
Hedge fund activity in VAALCO Energy, Inc. (NYSE:EGY)
At Q1’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards EGY over the last 15 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in VAALCO Energy, Inc. (NYSE:EGY), which was worth $7.2 million at the end of the first quarter. On the second spot was Fondren Management which amassed $5.5 million worth of shares. Moreover, Ancora Advisors, Arrowstreet Capital, and ExodusPoint Capital were also bullish on VAALCO Energy, Inc. (NYSE:EGY), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, some big names have jumped into VAALCO Energy, Inc. (NYSE:EGY) headfirst. ExodusPoint Capital, managed by Michael Gelband, initiated the largest position in VAALCO Energy, Inc. (NYSE:EGY). ExodusPoint Capital had $0.1 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also made a $0.1 million investment in the stock during the quarter. The other funds with brand new EGY positions are Matthew Hulsizer’s PEAK6 Capital Management and Chuck Royce’s Royce & Associates.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as VAALCO Energy, Inc. (NYSE:EGY) but similarly valued. These stocks are CSI Compressco LP (NASDAQ:CCLP), Surface Oncology, Inc. (NASDAQ:SURF), Fonar Corporation (NASDAQ:FONR), and Town Sports International Holdings, Inc. (NASDAQ:CLUB). This group of stocks’ market valuations match EGY’s market valuation.
|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 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $16 million in EGY’s case. Town Sports International Holdings, Inc. (NASDAQ:CLUB) is the most popular stock in this table. On the other hand CSI Compressco LP (NASDAQ:CCLP) is the least popular one with only 6 bullish hedge fund positions. VAALCO Energy, Inc. (NYSE:EGY) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately EGY wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on EGY were disappointed as the stock returned -32.1% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.