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Is VAALCO Energy, Inc. (EGY) A Good Stock To Buy?

We can judge whether VAALCO Energy, Inc. (NYSE:EGY) 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, research shows that these picks historically outperformed the market when we factor in known risk factors.

Is VAALCO Energy, Inc. (NYSE:EGY) a buy here? Money managers are in a bearish mood. The number of long hedge fund bets fell by 6 recently, which is even more surprising, considering that the shares of the company were up 39.39% during the third quarter. The hedge fund behavior prompted us to find out more about the hedge funds holding positions in VAALCO Energy, Inc. (NYSE:EGY), towards the end of September.

For understanding the overall hedge fund sentiment, we will also compare VAALCO Energy, Inc. (NYSE:EGY) to other stocks, including ReneSola Ltd. (ADR) (NYSE:SOL), Neonode, Inc (NASDAQ:NEON), and Mitek Systems, Inc. (NASDAQ:MITK) to get a better sense of its popularity.

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According to most traders, hedge funds are assumed to be slow, outdated financial tools of years past. While there are more than an 8000 funds in operation today, Our experts choose to focus on the bigwigs of this club, about 700 funds. Most estimates calculate that this group of people direct bulk of the hedge fund industry’s total asset base, and by following their matchless investments, Insider Monkey has discovered several investment strategies that have historically outrun the broader indices. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points a year for a decade in their back tests.

With all of this in mind, we’re going to go over the latest action surrounding VAALCO Energy, Inc. (NYSE:EGY).

How have hedgies been trading VAALCO Energy, Inc. (NYSE:EGY)?

At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 46% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, D E Shaw holds the number one position in VAALCO Energy, Inc. (NYSE:EGY). D E Shaw has a $0.9 million position in the stock, comprising less than 0.1% of its 13F portfolio. Coming in second is AQR Capital Management, managed by Cliff Asness, which holds a $0.7 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions encompass Renaissance Technologies, Israel Englander’s Millennium Management, and John Overdeck and David Siegel’s Two Sigma Advisors.

Because VAALCO Energy, Inc. (NYSE:EGY) has faced a bearish sentiment from hedge fund managers, we can see that there lies a certain “tier” of money managers who were dropping their full holdings by the end of the third quarter. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP dumped the largest stake of the “upper crust” of funds watched by Insider Monkey, comprising about $0.1 million in stock. Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s fund, GRT Capital Partners, also dropped its stock, about $0.1 million worth of shares. These bearish behaviors are important to note, as total hedge fund interest fell by 6 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to VAALCO Energy, Inc. (NYSE:EGY). These stocks are ReneSola Ltd. (ADR) (NYSE:SOL), Neonode, Inc (NASDAQ:NEON), Mitek Systems, Inc. (NASDAQ:MITK), and Calithera Biosciences Inc (NASDAQ:CALA). This group of stocks’ market caps are similar to VAALCO Energy, Inc. (NYSE:EGY)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SOL 4 5334 0
NEON 6 3213 -1
MITK 6 1962 -1
CALA 5 21817 -1

As you can see, these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $3 million in VAALCO Energy, Inc. (NYSE:EGY)’s case. Neonode, Inc (NASDAQ:NEON) is the most popular stock in this table. On the other hand, ReneSola Ltd. (ADR) (NYSE:SOL) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks, VAALCO Energy, Inc. (NYSE:EGY) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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