In this article we will check out the progression of hedge fund sentiment towards Civeo Corporation (NYSE:CVEO) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is CVEO a good stock to buy now? The best stock pickers were in a pessimistic mood. The number of bullish hedge fund positions shrunk by 2 lately. Civeo Corporation (NYSE:CVEO) was in 12 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 18. Our calculations also showed that CVEO 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.
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 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Dmitry Balyasny of Balyasny Asset Management
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. With all of this in mind we’re going to take a glance at the new hedge fund action surrounding Civeo Corporation (NYSE:CVEO).
Do Hedge Funds Think CVEO Is A Good Stock To Buy Now?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the second quarter of 2020. By comparison, 13 hedge funds held shares or bullish call options in CVEO a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Horizon Asset Management was the largest shareholder of Civeo Corporation (NYSE:CVEO), with a stake worth $25.9 million reported as of the end of September. Trailing Horizon Asset Management was Renaissance Technologies, which amassed a stake valued at $6.6 million. Prescott Group Capital Management, DC Capital Partners, and Balyasny Asset Management 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 DC Capital Partners allocated the biggest weight to Civeo Corporation (NYSE:CVEO), around 11.48% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, setting aside 2.86 percent of its 13F equity portfolio to CVEO.
Judging by the fact that Civeo Corporation (NYSE:CVEO) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few funds who sold off their full holdings heading into Q4. Intriguingly, D. E. Shaw’s D E Shaw dropped the largest position of the 750 funds monitored by Insider Monkey, valued at close to $0.2 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund cut about $0.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds heading into Q4.
Let’s check out hedge fund activity in other stocks similar to Civeo Corporation (NYSE:CVEO). We will take a look at Esquire Financial Holdings, Inc. (NASDAQ:ESQ), Lumos Pharma, Inc. (NASDAQ:LUMO), Babcock & Wilcox Enterprises Inc (NYSE:BW), Safeguard Scientifics, Inc (NYSE:SFE), Natural Gas Services Group, Inc. (NYSE:NGS), Mistras Group, Inc. (NYSE:MG), and StoneMor Inc. (NYSE:STON). All of these stocks’ market caps are closest to CVEO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ESQ | 4 | 12212 | -1 |
| LUMO | 5 | 26303 | 0 |
| BW | 4 | 6173 | -2 |
| SFE | 6 | 8901 | -4 |
| NGS | 11 | 13926 | 1 |
| MG | 12 | 9811 | 1 |
| STON | 3 | 78903 | -1 |
| Average | 6.4 | 22318 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.4 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $42 million in CVEO’s case. Mistras Group, Inc. (NYSE:MG) is the most popular stock in this table. On the other hand StoneMor Inc. (NYSE:STON) is the least popular one with only 3 bullish hedge fund positions. Civeo Corporation (NYSE:CVEO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CVEO is 73. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on CVEO as the stock returned 98.6% since the end of Q3 (through 12/8) 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.
