Does National Oilwell Varco, Inc. (NYSE:NOV) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.
National Oilwell Varco, Inc. (NYSE:NOV) was in 22 hedge funds' portfolios at the end of September. NOV shareholders have witnessed an increase in hedge fund sentiment recently. There were 14 hedge funds in our database with NOV holdings at the end of the previous quarter. Our calculations also showed that NOV isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to go over the fresh hedge fund action surrounding National Oilwell Varco, Inc. (NYSE:NOV).
Hedge fund activity in National Oilwell Varco, Inc. (NYSE:NOV)
Heading into the fourth quarter of 2018, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 57% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NOV over the last 13 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the number one position in National Oilwell Varco, Inc. (NYSE:NOV). Pzena Investment Management has a $395.3 million position in the stock, comprising 1.9% of its 13F portfolio. Coming in second is Select Equity Group, led by Robert Joseph Caruso, holding a $52.8 million position; 0.4% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism consist of Anand Parekh's Alyeska Investment Group, John W. Rogers's Ariel Investments and Jim Simons's Renaissance Technologies.
As industrywide interest jumped, specific money managers were breaking ground themselves. Alyeska Investment Group, managed by Anand Parekh, established the largest position in National Oilwell Varco, Inc. (NYSE:NOV). Alyeska Investment Group had $52.7 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $6.5 million position during the quarter. The other funds with brand new NOV positions are Matthew Tewksbury's Stevens Capital Management, George Hall's Clinton Group, and Benjamin A. Smith's Laurion Capital Management.
Let's now take a look at hedge fund activity in other stocks similar to National Oilwell Varco, Inc. (NYSE:NOV). We will take a look at ResMed Inc. (NYSE:RMD), Telefonica Brasil SA (NYSE:VIV), Essex Property Trust Inc (NYSE:ESS), and CNH Industrial NV (NYSE:CNHI). 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 RMD,24,488694,5 VIV,13,86839,4 ESS,16,406511,-7 CNHI,14,341616,0 Average,16.75,330915,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $331 million. That figure was $640 million in NOV's case. ResMed Inc. (NYSE:RMD) is the most popular stock in this table. On the other hand Telefonica Brasil SA (NYSE:VIV) is the least popular one with only 13 bullish hedge fund positions. National Oilwell Varco, Inc. (NYSE:NOV) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. In this regard RMD might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.