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NOV Inc. (NOV): Hedge Funds Are Nibbling

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  • ^GSPC
  • NOV

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of NOV Inc. (NYSE:NOV).

Is NOV Inc. (NYSE:NOV) a buy right now? Money managers were getting more bullish. The number of long hedge fund positions advanced by 1 in recent months. NOV Inc. (NYSE:NOV) was in 30 hedge funds' portfolios at the end of June. The all time high for this statistic is 33. Our calculations also showed that NOV isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

At the moment there are a large number of metrics market participants use to appraise their stock investments. A couple of the most innovative metrics are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the elite money managers can beat the S&P 500 by a very impressive margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Donald Sussman Paloma Partners
Donald Sussman Paloma Partners

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 let's go over the new hedge fund action surrounding NOV Inc. (NYSE:NOV).

Do Hedge Funds Think NOV Is A Good Stock To Buy Now?

At Q2's end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NOV over the last 24 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in NOV Inc. (NYSE:NOV) was held by Pzena Investment Management, which reported holding $629.5 million worth of stock at the end of June. It was followed by Contrarius Investment Management with a $95.4 million position. Other investors bullish on the company included Balyasny Asset Management, Masters Capital Management, and Ariel Investments. In terms of the portfolio weights assigned to each position Mountain Lake Investment Management allocated the biggest weight to NOV Inc. (NYSE:NOV), around 6.05% of its 13F portfolio. Contrarius Investment Management is also relatively very bullish on the stock, dishing out 4.64 percent of its 13F equity portfolio to NOV.

As aggregate interest increased, some big names have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest position in NOV Inc. (NYSE:NOV). Balyasny Asset Management had $39.8 million invested in the company at the end of the quarter. Mike Masters's Masters Capital Management also initiated a $35.2 million position during the quarter. The following funds were also among the new NOV investors: Mark Coe's Intrinsic Edge Capital, Israel Englander's Millennium Management, and Donald Sussman's Paloma Partners.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as NOV Inc. (NYSE:NOV) but similarly valued. We will take a look at Stag Industrial Inc (NYSE:STAG), NCR Corporation (NYSE:NCR), AbCellera Biologics Inc. (NASDAQ:ABCL), DigitalOcean Holdings, Inc. (NYSE:DOCN), Yatsen Holding Limited (NYSE:YSG), Shoals Technologies Group, Inc. (NASDAQ:SHLS), and Macy's, Inc. (NYSE:M). This group of stocks' market values resemble NOV's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STAG,15,232197,-2 NCR,38,526452,14 ABCL,18,773158,-2 DOCN,16,219780,-6 YSG,18,374234,-2 SHLS,12,342043,-10 M,35,1022637,4 Average,21.7,498643,-0.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $499 million. That figure was $993 million in NOV's case. NCR Corporation (NYSE:NCR) is the most popular stock in this table. On the other hand Shoals Technologies Group, Inc. (NASDAQ:SHLS) is the least popular one with only 12 bullish hedge fund positions. NOV Inc. (NYSE:NOV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NOV is 67.9. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately NOV wasn't nearly as popular as these 5 stocks and hedge funds that were betting on NOV were disappointed as the stock returned -2.2% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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