Is PVAC A Good Stock To Buy Now?

In this article we will analyze whether Penn Virginia Corporation (NASDAQ:PVAC) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is PVAC a good stock to buy now? Hedge funds were becoming less confident. The number of long hedge fund positions shrunk by 2 in recent months. Penn Virginia Corporation (NASDAQ:PVAC) was in 9 hedge funds’ portfolios at the end of September. The all time high for this statistics is 21. Our calculations also showed that PVAC 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). There were 11 hedge funds in our database with PVAC positions at the end of the second quarter.

Video: 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In the eyes of most market participants, hedge funds are assumed to be worthless, outdated investment tools of years past. While there are more than 8000 funds trading today, Our experts look at the top tier of this club, approximately 850 funds. Most estimates calculate that this group of people handle the majority of all hedge funds’ total capital, and by paying attention to their top equity investments, Insider Monkey has brought to light numerous investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Nathaniel August - Mangrove Partners

Nathaniel August of Mangrove Partners

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 gander at the fresh hedge fund action encompassing Penn Virginia Corporation (NASDAQ:PVAC).

Do Hedge Funds Think PVAC Is A Good Stock To Buy Now?

At the end of September, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the second quarter of 2020. On the other hand, there were a total of 16 hedge funds with a bullish position in PVAC a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Penn Virginia Corporation (NASDAQ:PVAC) was held by 683 Capital Partners, which reported holding $8.7 million worth of stock at the end of September. It was followed by Silver Point Capital with a $5.6 million position. Other investors bullish on the company included Arrowstreet Capital, Mangrove Partners, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Silver Point Capital allocated the biggest weight to Penn Virginia Corporation (NASDAQ:PVAC), around 0.69% of its 13F portfolio. 683 Capital Partners is also relatively very bullish on the stock, designating 0.64 percent of its 13F equity portfolio to PVAC.

Because Penn Virginia Corporation (NASDAQ:PVAC) has witnessed bearish sentiment from the smart money, logic holds that there was a specific group of funds who sold off their entire stakes heading into Q4. Interestingly, Chuck Royce’s Royce & Associates said goodbye to the biggest position of the “upper crust” of funds tracked by Insider Monkey, totaling close to $0.6 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund cut about $0.3 million worth. These transactions are important to note, as total hedge fund interest fell by 2 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to Penn Virginia Corporation (NASDAQ:PVAC). These stocks are Ramaco Resources, Inc. (NASDAQ:METC), Tsakos Energy Navigation Ltd. (NYSE:TNP), Horizon Global Corp (NYSE:HZN), Ayala Pharmaceuticals, Inc. (NASDAQ:AYLA), Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP), BioSig Technologies, Inc. (NASDAQ:BSGM), and ContraFect Corp (NASDAQ:CFRX). This group of stocks’ market caps resemble PVAC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
METC 6 2809 -3
TNP 4 11320 -5
HZN 3 16612 0
AYLA 3 10125 -1
CRBP 8 16655 -6
BSGM 3 294 0
CFRX 11 22007 1
Average 5.4 11403 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.4 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $26 million in PVAC’s case. ContraFect Corp (NASDAQ:CFRX) is the most popular stock in this table. On the other hand Horizon Global Corp (NYSE:HZN) is the least popular one with only 3 bullish hedge fund positions. Penn Virginia Corporation (NASDAQ:PVAC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PVAC is 53.4. 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. 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 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 beat the market again by 16.2 percentage points. Unfortunately PVAC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PVAC were disappointed as the stock returned -3.5% since the end of September (through 12/8) 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.

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