Here is What Hedge Funds Think About Valaris Limited (VAL)

·5 min read

The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Valaris Limited (NYSE:VAL).

Valaris Limited (NYSE:VAL) has seen an increase in enthusiasm from smart money in recent months. Valaris Limited (NYSE:VAL) was in 29 hedge funds' portfolios at the end of June. The all time high for this statistic is 43. Our calculations also showed that VAL isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Andy Redleaf Andrew Redleaf Whitebox Advisors
Andy Redleaf Andrew Redleaf Whitebox Advisors

Andy Redleaf of Whitebox Advisors

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. Keeping this in mind we're going to take a look at the fresh hedge fund action regarding Valaris Limited (NYSE:VAL).

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

At second quarter's end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29 from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards VAL over the last 24 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, GoldenTree Asset Management was the largest shareholder of Valaris Limited (NYSE:VAL), with a stake worth $209.3 million reported as of the end of June. Trailing GoldenTree Asset Management was Canyon Capital Advisors, which amassed a stake valued at $103.2 million. Contrarius Investment Management, King Street Capital, and Whitebox Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position King Street Capital allocated the biggest weight to Valaris Limited(NYSE:VAL), around 7.8% of its 13F portfolio. GoldenTree Asset Management is also relatively very bullish on the stock, setting aside 5.55 percent of its 13F equity portfolio to VAL.

As aggregate interest increased, key hedge funds have jumped into Valaris Limited (NYSE:VAL) headfirst. GoldenTree Asset Management, managed by Steven Tananbaum, assembled the most outsized position in Valaris Limited (NYSE:VAL). GoldenTree Asset Management had $209.3 million invested in the company at the end of the quarter. Joshua Friedman and Mitchell Julis's Canyon Capital Advisors also made a $103.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Stephen Mildenhall's Contrarius Investment Management, Brian J. Higgins's King Street Capital, and Andy Redleaf's Whitebox Advisors.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Valaris Limited (NYSE:VAL) but similarly valued. We will take a look at bluebird bio Inc (NASDAQ:BLUE), Clean Energy Fuels Corp (NASDAQ:CLNE), Newmark Group, Inc. (NASDAQ:NMRK), HeadHunter Group PLC (NASDAQ:HHR), Danimer Scientific, Inc. (NYSE:DNMR), Talend S.A. (NASDAQ:TLND), and Sykes Enterprises, Incorporated (NASDAQ:SYKE). This group of stocks' market values are similar to VAL's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BLUE,24,221409,-3 CLNE,17,31392,2 NMRK,21,217994,0 HHR,14,38174,7 DNMR,30,309530,0 TLND,36,1058430,-9 SYKE,19,245998,5 Average,23,303275,0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $303 million. That figure was $875 million in VAL's case. Talend S.A. (NASDAQ:TLND) is the most popular stock in this table. On the other hand HeadHunter Group PLC (NASDAQ:HHR) is the least popular one with only 14 bullish hedge fund positions. Valaris Limited (NYSE:VAL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VAL is 64.3. 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. 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 still beat the market by 4.5 percentage points. Hedge funds were also right about betting on VAL as the stock returned 23.6% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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