In this article you are going to find out whether hedge funds think Valaris Limited (NYSE:VAL) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is VAL a good stock to buy? Valaris Limited (NYSE:VAL) has seen a decrease in support from the world’s most elite money managers lately. Valaris Limited (NYSE:VAL) was in 26 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 43. Our calculations also showed that VAL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to analyze the latest hedge fund action regarding Valaris Limited (NYSE:VAL).
Do Hedge Funds Think VAL Is A Good Stock To Buy Now?
At the end of September, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards VAL over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, GoldenTree Asset Management was the largest shareholder of Valaris Limited (NYSE:VAL), with a stake worth $252.4 million reported as of the end of September. Trailing GoldenTree Asset Management was Canyon Capital Advisors, which amassed a stake valued at $118.8 million. Contrarius Investment Management, King Street Capital, and Whitebox Advisors 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 GoldenTree Asset Management allocated the biggest weight to Valaris Limited (NYSE:VAL), around 10.39% of its 13F portfolio. King Street Capital is also relatively very bullish on the stock, dishing out 7.2 percent of its 13F equity portfolio to VAL.
Because Valaris Limited (NYSE:VAL) has witnessed falling interest from hedge fund managers, it’s safe to say that there were a few funds who sold off their positions entirely heading into Q4. Interestingly, Robert Bishop’s Impala Asset Management cut the biggest stake of all the hedgies followed by Insider Monkey, worth about $7.8 million in stock. Mark Coe’s fund, Intrinsic Edge Capital, also dumped its stock, about $5.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Valaris Limited (NYSE:VAL) but similarly valued. These stocks are Sunstone Hotel Investors Inc (NYSE:SHO), Belden Inc. (NYSE:BDC), SAGE Therapeutics Inc (NASDAQ:SAGE), Comfort Systems USA, Inc. (NYSE:FIX), Intercorp Financial Services Inc. (NYSE:IFS), Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB), and Erasca Inc. (NASDAQ:ERAS). This group of stocks’ market caps are similar to VAL’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 14.9 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $1060 million in VAL’s case. Sunstone Hotel Investors Inc (NYSE:SHO) is the most popular stock in this table. On the other hand Intercorp Financial Services Inc. (NYSE:IFS) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Valaris Limited (NYSE:VAL) is more popular among hedge funds. Our overall hedge fund sentiment score for VAL is 70.1. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately VAL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VAL were disappointed as the stock returned -12.1% since the end of the third quarter (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Valaris Ltd (NYSE:VAL)
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Disclosure: None. This article was originally published at Insider Monkey.