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The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Brigham Minerals, Inc. (NYSE:MNRL).
Brigham Minerals, Inc. (NYSE:MNRL) has experienced a decrease in hedge fund interest of late. Our calculations also showed that MNRL 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.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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George Soros of Soros Fund Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We're going to take a glance at the key hedge fund action regarding Brigham Minerals, Inc. (NYSE:MNRL).
Hedge fund activity in Brigham Minerals, Inc. (NYSE:MNRL)
Heading into the fourth quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in MNRL over the last 17 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Encompass Capital Advisors held the most valuable stake in Brigham Minerals, Inc. (NYSE:MNRL), which was worth $14.3 million at the end of the third quarter. On the second spot was Soros Fund Management which amassed $11.7 million worth of shares. Adage Capital Management, Carlson Capital, and Millennium Management 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 JHL Capital Group allocated the biggest weight to Brigham Minerals, Inc. (NYSE:MNRL), around 1.55% of its 13F portfolio. Encompass Capital Advisors is also relatively very bullish on the stock, designating 0.98 percent of its 13F equity portfolio to MNRL.
Since Brigham Minerals, Inc. (NYSE:MNRL) has faced a decline in interest from the aggregate hedge fund industry, we can see that there were a few funds who were dropping their entire stakes in the third quarter. At the top of the heap, Guy Shahar's DSAM Partners cut the biggest stake of the "upper crust" of funds followed by Insider Monkey, valued at an estimated $0.2 million in stock, and David E. Shaw's D E Shaw was right behind this move, as the fund cut about $0.2 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds in the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Brigham Minerals, Inc. (NYSE:MNRL) but similarly valued. We will take a look at PGT Innovations Inc. (NYSE:PGTI), Orion Engineered Carbons SA (NYSE:OEC), Funko, Inc. (NASDAQ:FNKO), and Warrior Met Coal, Inc. (NYSE:HCC). All of these stocks' market caps are closest to MNRL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PGTI,17,119291,-2 OEC,18,209028,1 FNKO,23,97803,6 HCC,27,233578,-4 Average,21.25,164925,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $165 million. That figure was $76 million in MNRL's case. Warrior Met Coal, Inc. (NYSE:HCC) is the most popular stock in this table. On the other hand PGT Innovations Inc. (NYSE:PGTI) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Brigham Minerals, Inc. (NYSE:MNRL) is even less popular than PGTI. Hedge funds dodged a bullet by taking a bearish stance towards MNRL. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately MNRL wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MNRL investors were disappointed as the stock returned -1% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.