The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Devon Energy Corporation (NYSE:DVN)?
Is Devon Energy Corporation (NYSE:DVN) the right investment to pursue these days? Hedge funds are reducing their bets on the stock. The number of long hedge fund positions were trimmed by 12 lately. Our calculations also showed that DVN 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 44 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, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. 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. Now we’re going to check out the key hedge fund action encompassing Devon Energy Corporation (NYSE:DVN).
Hedge fund activity in Devon Energy Corporation (NYSE:DVN)
At Q1’s end, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -22% from the previous quarter. The graph below displays the number of hedge funds with bullish position in DVN over the last 18 quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Brandon Haley’s Holocene Advisors has the most valuable position in Devon Energy Corporation (NYSE:DVN), worth close to $36.4 million, amounting to 0.4% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, holding a $31.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish encompass D. E. Shaw’s D E Shaw, Vince Maddi and Shawn Brennan’s SIR Capital Management and Ken Fisher’s Fisher Asset Management. In terms of the portfolio weights assigned to each position SIR Capital Management allocated the biggest weight to Devon Energy Corporation (NYSE:DVN), around 9.1% of its 13F portfolio. Rutabaga Capital Management is also relatively very bullish on the stock, setting aside 1.03 percent of its 13F equity portfolio to DVN.
Due to the fact that Devon Energy Corporation (NYSE:DVN) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedgies who were dropping their positions entirely last quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dropped the largest stake of the “upper crust” of funds tracked by Insider Monkey, worth close to $40.7 million in stock, and Ric Dillon’s Diamond Hill Capital was right behind this move, as the fund said goodbye to about $30.4 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 12 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Devon Energy Corporation (NYSE:DVN). These stocks are Nexstar Media Group, Inc. (NASDAQ:NXST), Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI), Medpace Holdings, Inc. (NASDAQ:MEDP), and Ultrapar Participacoes SA (NYSE:UGP). This group of stocks’ market valuations match DVN’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 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $221 million. That figure was $223 million in DVN’s case. Nexstar Media Group, Inc. (NASDAQ:NXST) is the most popular stock in this table. On the other hand Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Devon Energy Corporation (NYSE:DVN) 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 returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on DVN as the stock returned 56.4% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.