Where Do Hedge Funds Stand On VAALCO Energy, Inc. (EGY)?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to VAALCO Energy, Inc. (NYSE:EGY) changed recently.

Hedge fund interest in VAALCO Energy, Inc. (NYSE:EGY) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that EGY 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as AstroNova, Inc. (NASDAQ:ALOT), Proteostasis Therapeutics, Inc. (NASDAQ:PTI), and Fauquier Bankshares, Inc. (NASDAQ:FBSS) to gather more data points.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most shareholders, hedge funds are seen as unimportant, old financial tools of years past. While there are greater than 8000 funds trading at the moment, Our experts hone in on the moguls of this group, approximately 850 funds. These money managers have their hands on bulk of all hedge funds’ total capital, and by watching their unrivaled picks, Insider Monkey has identified several investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum 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 .

Fred DiSanto Ancora Advisors

Fred DiSanto of Ancora Advisors

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. Keeping this in mind let’s check out the latest hedge fund action regarding 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 change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EGY over the last 21 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in VAALCO Energy, Inc. (NYSE:EGY), which was worth $3.7 million at the end of the third quarter. On the second spot was Fondren Management which amassed $2.5 million worth of shares. Ancora Advisors, Arrowstreet Capital, and Winton Capital Management 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 Fondren Management allocated the biggest weight to VAALCO Energy, Inc. (NYSE:EGY), around 14.59% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to EGY.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as VAALCO Energy, Inc. (NYSE:EGY) but similarly valued. These stocks are AstroNova, Inc. (NASDAQ:ALOT), Proteostasis Therapeutics, Inc. (NASDAQ:PTI), Fauquier Bankshares, Inc. (NASDAQ:FBSS), Smart Sand, Inc. (NASDAQ:SND), Digital Ally, Inc. (NASDAQ:DGLY), Canterbury Park Holding Corporation (NASDAQ:CPHC), and Jupai Holdings Limited (NYSE:JP). This group of stocks’ market valuations are similar to EGY’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ALOT 8 8719 -4
PTI 5 3545 -1
FBSS 2 5457 0
SND 5 2192 -3
DGLY 1 411 -2
CPHC 1 5301 0
JP 1 261 -1
Average 3.3 3698 -1.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.3 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $8 million in EGY’s case. AstroNova, Inc. (NASDAQ:ALOT) is the most popular stock in this table. On the other hand Digital Ally, Inc. (NASDAQ:DGLY) is the least popular one with only 1 bullish hedge fund positions. VAALCO Energy, Inc. (NYSE:EGY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EGY is 68.9. 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 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on EGY as the stock returned 52% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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