Is Noble Corporation plc (NE) Is Burning These Hedge Funds

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ complex research processes to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we pay special attention to the hedge fund activity in the small-cap space. Nevertheless, it is also possible to find underpriced large-cap stocks by following the hedge funds’ moves.

Noble Corporation plc (NYSE:NE) has seen a decrease in enthusiasm from smart money lately. Our calculations also showed that NE isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most market participants, hedge funds are assumed to be slow, outdated financial vehicles of yesteryear. While there are over 8000 funds in operation today, Our researchers hone in on the elite of this club, around 750 funds. Most estimates calculate that this group of people manage the lion’s share of the smart money’s total capital, and by shadowing their finest stock picks, Insider Monkey has brought to light a few investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .


Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to check out the latest hedge fund action regarding Noble Corporation plc (NYSE:NE).

What have hedge funds been doing with Noble Corporation plc (NYSE:NE)?

At Q2’s end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -30% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in NE a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Bill Miller

More specifically, Firefly Value Partners was the largest shareholder of Noble Corporation plc (NYSE:NE), with a stake worth $37.7 million reported as of the end of March. Trailing Firefly Value Partners was DC Capital Partners, which amassed a stake valued at $7.5 million. Luminus Management, Shah Capital Management, and Brigade Capital were also very fond of the stock, giving the stock large weights in their portfolios.

Because Noble Corporation plc (NYSE:NE) has faced a decline in interest from the smart money, we can see that there exists a select few hedge funds that decided to sell off their positions entirely in the second quarter. Intriguingly, David Harding’s Winton Capital Management dropped the largest stake of the “upper crust” of funds watched by Insider Monkey, comprising close to $4.7 million in stock, and John Thiessen’s Vertex One Asset Management was right behind this move, as the fund sold off about $2.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 7 funds in the second quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Noble Corporation plc (NYSE:NE) but similarly valued. These stocks are PCM, Inc. (NASDAQ:PCMI), Oxford Lane Capital Corp. (NASDAQ:OXLC), Clarus Corporation (NASDAQ:CLAR), and Penn Virginia Corporation (NASDAQ:PVAC). 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
PCMI 10 23013 -7
OXLC 3 1694 2
CLAR 14 59330 1
PVAC 17 191377 0
Average 11 68854 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $67 million in NE’s case. Penn Virginia Corporation (NASDAQ:PVAC) is the most popular stock in this table. On the other hand Oxford Lane Capital Corp. (NASDAQ:OXLC) is the least popular one with only 3 bullish hedge fund positions. Noble Corporation plc (NYSE:NE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately NE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on NE were disappointed as the stock returned -32.1% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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