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Hedge Funds Never Been Less Bullish On Noble Corporation plc (NE)

In this article we will take a look at whether hedge funds think Noble Corporation plc (NYSE:NE) 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 Noble Corporation plc (NYSE:NE) ready to rally soon? Investors who are in the know are turning less bullish. The number of bullish hedge fund bets were cut by 4 recently. Our calculations also showed that NE 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.

To most stock holders, hedge funds are seen as worthless, outdated financial vehicles of the past. While there are more than 8000 funds with their doors open at the moment, Our researchers look at the top tier of this club, about 850 funds. Most estimates calculate that this group of people shepherd most of the hedge fund industry’s total capital, and by following their top picks, Insider Monkey has formulated a number of investment strategies that have historically outpaced the market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Michael Hintze CQS Capital

Michael Hintze of CQS Cayman LP

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. Keeping this in mind let’s take a look at the recent hedge fund action regarding Noble Corporation plc (NYSE:NE).

Hedge fund activity in Noble Corporation plc (NYSE:NE)

Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -22% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NE over the last 18 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

More specifically, Contrarius Investment Management was the largest shareholder of Noble Corporation plc (NYSE:NE), with a stake worth $6.3 million reported as of the end of September. Trailing Contrarius Investment Management was Firefly Value Partners, which amassed a stake valued at $6.1 million. Shah Capital Management, Luminus Management, and Renaissance Technologies 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 Shah Capital Management allocated the biggest weight to Noble Corporation plc (NYSE:NE), around 2.27% of its 13F portfolio. DC Capital Partners is also relatively very bullish on the stock, setting aside 1.73 percent of its 13F equity portfolio to NE.

Because Noble Corporation plc (NYSE:NE) has experienced falling interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of fund managers that decided to sell off their full holdings heading into Q4. Intriguingly, Kenneth Tropin’s Graham Capital Management dumped the biggest position of all the hedgies monitored by Insider Monkey, totaling an estimated $1.3 million in stock, and Ken Fisher’s Fisher Asset Management was right behind this move, as the fund dropped about $0.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 4 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Noble Corporation plc (NYSE:NE) but similarly valued. We will take a look at EMCORE Corporation (NASDAQ:EMKR), Pluristem Therapeutics Inc. (NASDAQ:PSTI), United-Guardian, Inc. (NASDAQ:UG), and Guaranty Federal Bancshares, Inc. (NASDAQ:GFED). This group of stocks’ market caps resemble NE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EMKR 12 26002 0
PSTI 5 1909 3
UG 2 5998 0
GFED 2 2234 0
Average 5.25 9036 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $17 million in NE’s case. EMCORE Corporation (NASDAQ:EMKR) is the most popular stock in this table. On the other hand United-Guardian, Inc. (NASDAQ:UG) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Noble Corporation plc (NYSE:NE) 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 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 NE, though not to the same extent, as the stock returned 22.3% in Q2 (through June 25th) and outperformed the market as well.

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