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Here’s What Hedge Funds Think About National Oilwell Varco, Inc. (NOV)

Nina Todic

Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by more than 6 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of National Oilwell Varco, Inc. (NYSE:NOV).

National Oilwell Varco, Inc. (NYSE:NOV) was in 18 hedge funds' portfolios at the end of the first quarter of 2019. NOV has seen a decrease in hedge fund sentiment recently. There were 22 hedge funds in our database with NOV positions at the end of the previous quarter. Our calculations also showed that nov isn't among the 30 most popular stocks among hedge funds.

If you'd ask most shareholders, hedge funds are assumed to be unimportant, outdated investment tools of the past. While there are greater than 8000 funds with their doors open at the moment, We choose to focus on the moguls of this club, about 750 funds. These investment experts watch over most of the hedge fund industry's total capital, and by keeping an eye on their unrivaled investments, Insider Monkey has figured out various investment strategies that have historically defeated Mr. Market. Insider Monkey's flagship hedge fund strategy outpaced the S&P 500 index by around 5 percentage points per annum since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.

D. E. Shaw

Let's analyze the recent hedge fund action surrounding National Oilwell Varco, Inc. (NYSE:NOV).

Hedge fund activity in National Oilwell Varco, Inc. (NYSE:NOV)

Heading into the second quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NOV over the last 15 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with NOV Positions

Among these funds, Pzena Investment Management held the most valuable stake in National Oilwell Varco, Inc. (NYSE:NOV), which was worth $442.5 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $78.1 million worth of shares. Moreover, D E Shaw, Select Equity Group, and Millennium Management were also bullish on National Oilwell Varco, Inc. (NYSE:NOV), allocating a large percentage of their portfolios to this stock.

Judging by the fact that National Oilwell Varco, Inc. (NYSE:NOV) has experienced falling interest from the smart money, it's easy to see that there exists a select few hedgies that elected to cut their positions entirely by the end of the third quarter. It's worth mentioning that Ryan Caldwell's Chiron Investment Management dropped the biggest position of the 700 funds monitored by Insider Monkey, comprising about $19 million in stock. Michael Kharitonov and Jon David McAuliffe's fund, Voleon Capital, also dumped its stock, about $2.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 4 funds by the end of the third quarter.

Let's check out hedge fund activity in other stocks similar to National Oilwell Varco, Inc. (NYSE:NOV). We will take a look at Ralph Lauren Corporation (NYSE:RL), Trimble Inc. (NASDAQ:TRMB), Shaw Communications Inc (NYSE:SJR), and Iron Mountain Incorporated (NYSE:IRM). This group of stocks' market caps are closest to NOV's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RL,34,1434021,3 TRMB,14,572902,-3 SJR,12,275762,-2 IRM,18,149930,7 Average,19.5,608154,1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $608 million. That figure was $733 million in NOV's case. Ralph Lauren Corporation (NYSE:RL) is the most popular stock in this table. On the other hand Shaw Communications Inc (NYSE:SJR) is the least popular one with only 12 bullish hedge fund positions. National Oilwell Varco, Inc. (NYSE:NOV) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately NOV wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NOV investors were disappointed as the stock returned -20.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

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

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