Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors' money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Is Penn Virginia Corporation (NASDAQ:PVAC) undervalued? The best stock pickers are becoming more confident. The number of bullish hedge fund bets advanced by 1 in recent months. Our calculations also showed that PVAC isn't among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to analyze the latest hedge fund action surrounding Penn Virginia Corporation (NASDAQ:PVAC).
How are hedge funds trading Penn Virginia Corporation (NASDAQ:PVAC)?
Heading into the fourth quarter of 2018, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards PVAC over the last 13 quarters. With hedge funds' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
More specifically, Strategic Value Partners was the largest shareholder of Penn Virginia Corporation (NASDAQ:PVAC), with a stake worth $123.6 million reported as of the end of September. Trailing Strategic Value Partners was Mangrove Partners, which amassed a stake valued at $115.8 million. Contrarian Capital, Silver Point Capital, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, specific money managers have jumped into Penn Virginia Corporation (NASDAQ:PVAC) headfirst. Portolan Capital Management, managed by George McCabe, established the most outsized position in Penn Virginia Corporation (NASDAQ:PVAC). Portolan Capital Management had $4.6 million invested in the company at the end of the quarter. David Costen Haley's HBK Investments also made a $1.5 million investment in the stock during the quarter. The other funds with brand new PVAC positions are Louis Bacon's Moore Global Investments, Noam Gottesman's GLG Partners, and D. E. Shaw's D E Shaw.
Let's now take a look at hedge fund activity in other stocks similar to Penn Virginia Corporation (NASDAQ:PVAC). These stocks are Sturm, Ruger & Company, Inc. (NYSE:RGR), Transenterix Inc (NYSEMKT:TRXC), Carbonite Inc (NASDAQ:CARB), and Cellectis SA (NASDAQ:CLLS). This group of stocks' market caps resemble PVAC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RGR,14,82977,-3 TRXC,14,30810,3 CARB,17,183901,0 CLLS,13,66403,-2 Average,14.5,91023,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $91 million. That figure was $420 million in PVAC's case. Carbonite Inc (NASDAQ:CARB) is the most popular stock in this table. On the other hand Cellectis SA (NASDAQ:CLLS) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Penn Virginia Corporation (NASDAQ:PVAC) 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.
Disclosure: None. This article was originally published at Insider Monkey.