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 Baytex Energy Corp (NYSE:BTE) based on those filings.
Baytex Energy Corp (NYSE:BTE) was in 6 hedge funds’ portfolios at the end of the first quarter of 2020. BTE has seen a decrease in enthusiasm from smart money recently. There were 12 hedge funds in our database with BTE positions at the end of the previous quarter. Our calculations also showed that BTE 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.
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 stocks recommended/scorned by legendary Bill Miller. 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. With all of this in mind let’s take a look at the recent hedge fund action regarding Baytex Energy Corp (NYSE:BTE).
Hedge fund activity in Baytex Energy Corp (NYSE:BTE)
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -50% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in BTE a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Among these funds, Luminus Management held the most valuable stake in Baytex Energy Corp (NYSE:BTE), which was worth $1.1 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $0.5 million worth of shares. Renaissance Technologies, Two Sigma Advisors, and Water Island 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 Luminus Management allocated the biggest weight to Baytex Energy Corp (NYSE:BTE), around 0.12% of its 13F portfolio. Water Island Capital is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to BTE.
Due to the fact that Baytex Energy Corp (NYSE:BTE) has witnessed bearish sentiment from hedge fund managers, we can see that there were a few hedgies that decided to sell off their full holdings last quarter. It’s worth mentioning that D. E. Shaw’s D E Shaw cut the biggest investment of the “upper crust” of funds watched by Insider Monkey, worth about $2.7 million in stock. Brad Dunkley and Blair Levinsky’s fund, Waratah Capital Advisors, also said goodbye to its stock, about $1.9 million worth. These moves are interesting, as aggregate hedge fund interest fell by 6 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Baytex Energy Corp (NYSE:BTE) but similarly valued. These stocks are vTv Therapeutics Inc (NASDAQ:VTVT), Xinyuan Real Estate Co., Ltd. (NYSE:XIN), L.B. Foster Company (NASDAQ:FSTR), and Duluth Holdings Inc. (NASDAQ:DLTH). This group of stocks’ market values are similar to BTE’s market value.
|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 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $3 million in BTE’s case. L.B. Foster Company (NASDAQ:FSTR) is the most popular stock in this table. On the other hand vTv Therapeutics Inc (NASDAQ:VTVT) is the least popular one with only 4 bullish hedge fund positions. Baytex Energy Corp (NYSE:BTE) is not the least popular stock in this group but hedge fund interest is still below 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on BTE as the stock returned 160.6% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.