Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Transocean Ltd (NYSE:RIG) based on that data.
Transocean Ltd (NYSE:RIG) investors should pay attention to an increase in hedge fund sentiment of late. Our calculations also showed that RIG isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most traders, hedge funds are seen as worthless, old investment tools of yesteryear. While there are more than 8000 funds with their doors open today, Our researchers look at the crème de la crème of this group, about 750 funds. These investment experts direct most of all hedge funds' total asset base, and by observing their highest performing picks, Insider Monkey has come up with a few investment strategies that have historically exceeded Mr. Market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_339612" align="aligncenter" width="450"] Kerr Neilson of Platinum Asset Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a glance at the recent hedge fund action surrounding Transocean Ltd (NYSE:RIG).
How are hedge funds trading Transocean Ltd (NYSE:RIG)?
At the end of the third quarter, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RIG over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Transocean Ltd (NYSE:RIG) was held by Platinum Asset Management, which reported holding $81.4 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $34.8 million position. Other investors bullish on the company included Avenue Capital, Tensile Capital, and Masters Capital Management. In terms of the portfolio weights assigned to each position Avenue Capital allocated the biggest weight to Transocean Ltd (NYSE:RIG), around 11.21% of its portfolio. Valueworks LLC is also relatively very bullish on the stock, designating 3.08 percent of its 13F equity portfolio to RIG.
As one would reasonably expect, key money managers have been driving this bullishness. Alyeska Investment Group, managed by Anand Parekh, established the most outsized position in Transocean Ltd (NYSE:RIG). Alyeska Investment Group had $11.9 million invested in the company at the end of the quarter. Mike Masters's Masters Capital Management also initiated a $5.4 million position during the quarter. The following funds were also among the new RIG investors: David Costen Haley's HBK Investments, Michael Gelband's ExodusPoint Capital, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's go over hedge fund activity in other stocks similar to Transocean Ltd (NYSE:RIG). We will take a look at SINA Corporation (NASDAQ:SINA), CONMED Corporation (NASDAQ:CNMD), Herman Miller, Inc. (NASDAQ:MLHR), and EQT Corporation (NYSE:EQT). This group of stocks' market values are similar to RIG's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SINA,19,256685,0 CNMD,22,201980,3 MLHR,26,209936,1 EQT,35,442221,0 Average,25.5,277706,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $278 million. That figure was $256 million in RIG's case. EQT Corporation (NYSE:EQT) is the most popular stock in this table. On the other hand SINA Corp (NASDAQ:SINA) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Transocean Ltd (NYSE:RIG) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on RIG as the stock returned 11.4% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.