Is Dorian LPG Ltd (LPG) A Good Stock To Buy?
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 866 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article we look at what those investors think of Dorian LPG Ltd (NYSE:LPG).
Is LPG a good stock to buy? Dorian LPG Ltd (NYSE:LPG) was in 18 hedge funds' portfolios at the end of March. The all time high for this statistic is 22. LPG has seen an increase in enthusiasm from smart money in recent months. There were 14 hedge funds in our database with LPG holdings at the end of December. Our calculations also showed that LPG isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Marshall of Marshall Wace
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Do Hedge Funds Think LPG Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in LPG over the last 23 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in Dorian LPG Ltd (NYSE:LPG) was held by Kensico Capital, which reported holding $54 million worth of stock at the end of December. It was followed by Royce & Associates with a $22 million position. Other investors bullish on the company included Millennium Management, Arrowstreet Capital, and Algert Global. In terms of the portfolio weights assigned to each position Kensico Capital allocated the biggest weight to Dorian LPG Ltd (NYSE:LPG), around 1.74% of its 13F portfolio. Dalton Investments is also relatively very bullish on the stock, dishing out 0.64 percent of its 13F equity portfolio to LPG.
Now, key money managers were leading the bulls' herd. Millennium Management, managed by Israel Englander, initiated the biggest position in Dorian LPG Ltd (NYSE:LPG). Millennium Management had $12.5 million invested in the company at the end of the quarter. Peter Algert's Algert Global also made a $1.4 million investment in the stock during the quarter. The following funds were also among the new LPG investors: Renaissance Technologies, Dmitry Balyasny's Balyasny Asset Management, and Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Dorian LPG Ltd (NYSE:LPG) but similarly valued. These stocks are Tarsus Pharmaceuticals, Inc. (NASDAQ:TARS), Chinook Therapeutics, Inc. (NASDAQ:KDNY), Beazer Homes USA, Inc. (NYSE:BZH), Sterling Construction Company, Inc. (NASDAQ:STRL), Ardelyx Inc (NASDAQ:ARDX), Barings BDC, Inc. (NYSE:BBDC), and Hovnanian Enterprises, Inc. (NYSE:HOV). All of these stocks' market caps are similar to LPG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TARS,8,267023,2 KDNY,15,189590,0 BZH,12,26820,2 STRL,13,64343,0 ARDX,17,192757,-3 BBDC,14,60269,-1 HOV,14,112557,2 Average,13.3,130480,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $130 million. That figure was $99 million in LPG's case. Ardelyx Inc (NASDAQ:ARDX) is the most popular stock in this table. On the other hand Tarsus Pharmaceuticals, Inc. (NASDAQ:TARS) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Dorian LPG Ltd (NYSE:LPG) is more popular among hedge funds. Our overall hedge fund sentiment score for LPG is 83.5. 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 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. Unfortunately LPG wasn't nearly as popular as these 5 stocks and hedge funds that were betting on LPG were disappointed as the stock returned -8.1% since the end of the first quarter (through 7/23) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
