Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Borr Drilling Limited (NYSE:BORR) based on that data.
Is Borr Drilling (BORR) a good stock to buy now? BORR has experienced an increase in support from the world’s most elite money managers recently. Borr Drilling Limited (NYSE:BORR) was in 6 hedge funds’ portfolios at the end of September. The all time high for this statistics is 5. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BORR isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
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 66 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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to go over the recent hedge fund action surrounding Borr Drilling Limited (NYSE:BORR).
How have hedgies been trading Borr Drilling Limited (NYSE:BORR)?
Heading into the fourth quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BORR over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Orbis Investment Management, managed by William B. Gray, holds the number one position in Borr Drilling Limited (NYSE:BORR). Orbis Investment Management has a $1.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is John Overdeck and David Siegel of Two Sigma Advisors, with a $0.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish encompass Daniel Gold’s QVT Financial, Ken Griffin’s Citadel Investment Group and Renaissance Technologies. In terms of the portfolio weights assigned to each position Orbis Investment Management allocated the biggest weight to Borr Drilling Limited (NYSE:BORR), around 0.01% of its 13F portfolio. QVT Financial is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to BORR.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. QVT Financial, managed by Daniel Gold, assembled the biggest position in Borr Drilling Limited (NYSE:BORR). QVT Financial had $0.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0 million investment in the stock during the quarter. The only other fund with a brand new BORR position is Israel Englander’s Millennium Management.
Let’s go over hedge fund activity in other stocks similar to Borr Drilling Limited (NYSE:BORR). These stocks are OP Bancorp (NASDAQ:OPBK), Bank7 Corp. (NASDAQ:BSVN), Avino Silver & Gold Mines Ltd. (NYSE:ASM), FedNat Holding Co (NASDAQ:FNHC), Abeona Therapeutics Inc (NASDAQ:ABEO), Magal Security Systems Ltd. (NASDAQ:MAGS), and Jianpu Technology Inc. (NYSE:JT). This group of stocks’ market valuations match BORR’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $2 million in BORR’s case. Abeona Therapeutics Inc (NASDAQ:ABEO) is the most popular stock in this table. On the other hand Bank7 Corp. (NASDAQ:BSVN) is the least popular one with only 2 bullish hedge fund positions. Borr Drilling Limited (NYSE:BORR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BORR is 52.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on BORR as the stock returned 58.9% since the end of Q3 (through 11/27) 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.