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As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Ovintiv Inc. (NYSE:OVV).
Is Ovintiv Inc. (NYSE:OVV) the right pick for your portfolio? The smart money was getting more optimistic. The number of bullish hedge fund bets advanced by 4 recently. Ovintiv Inc. (NYSE:OVV) was in 30 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 44. Our calculations also showed that OVV isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 26 hedge funds in our database with OVV positions at the end of the fourth quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Donald Sussman of Paloma Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. With all of this in mind we're going to take a gander at the latest hedge fund action encompassing Ovintiv Inc. (NYSE:OVV).
Do Hedge Funds Think OVV Is A Good Stock To Buy Now?
At the end of March, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from one quarter earlier. By comparison, 19 hedge funds held shares or bullish call options in OVV a year ago. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Arrowstreet Capital was the largest shareholder of Ovintiv Inc. (NYSE:OVV), with a stake worth $111.9 million reported as of the end of March. Trailing Arrowstreet Capital was Marshall Wace LLP, which amassed a stake valued at $98.1 million. Two Sigma Advisors, Citadel Investment Group, and D E Shaw 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 Maple Rock Capital allocated the biggest weight to Ovintiv Inc. (NYSE:OVV), around 4.54% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, dishing out 2.18 percent of its 13F equity portfolio to OVV.
Consequently, some big names have been driving this bullishness. Encompass Capital Advisors, managed by Todd J. Kantor, initiated the biggest position in Ovintiv Inc. (NYSE:OVV). Encompass Capital Advisors had $20.4 million invested in the company at the end of the quarter. Vince Maddi and Shawn Brennan's SIR Capital Management also made a $13 million investment in the stock during the quarter. The other funds with new positions in the stock are Cliff Asness's AQR Capital Management, Donald Sussman's Paloma Partners, and Bruce Kovner's Caxton Associates LP.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Ovintiv Inc. (NYSE:OVV) but similarly valued. These stocks are Coherent, Inc. (NASDAQ:COHR), Stericycle Inc (NASDAQ:SRCL), The Timken Company (NYSE:TKR), nCino, Inc. (NASDAQ:NCNO), BJ's Wholesale Club Holdings, Inc. (NYSE:BJ), Globus Medical Inc (NYSE:GMED), and Harley-Davidson, Inc. (NYSE:HOG). All of these stocks' market caps resemble OVV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position COHR,41,1454406,19 SRCL,24,648956,-1 TKR,23,225807,-11 NCNO,21,342756,-7 BJ,14,135957,-11 GMED,28,193769,-6 HOG,28,822936,-7 Average,25.6,546370,-3.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $546 million. That figure was $534 million in OVV's case. Coherent, Inc. (NASDAQ:COHR) is the most popular stock in this table. On the other hand BJ's Wholesale Club Holdings, Inc. (NYSE:BJ) is the least popular one with only 14 bullish hedge fund positions. Ovintiv Inc. (NYSE:OVV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OVV is 59.1. 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 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Hedge funds were also right about betting on OVV as the stock returned 35.6% since the end of Q1 (through 7/2) 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.