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In this article we will check out the progression of hedge fund sentiment towards Golar LNG Partners LP (NASDAQ:GMLP) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Hedge fund interest in Golar LNG Partners LP (NASDAQ:GMLP) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Sunlands Technology Group (NYSE:STG), Altus Midstream Company (NASDAQ:ALTM), and Ares Commercial Real Estate Corp (NYSE:ACRE) to gather more data points. Our calculations also showed that GMLP isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Joe Huber of Huber Capital Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's analyze the recent hedge fund action regarding Golar LNG Partners LP (NASDAQ:GMLP).
What does smart money think about Golar LNG Partners LP (NASDAQ:GMLP)?
At Q1's end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in GMLP a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Huber Capital Management held the most valuable stake in Golar LNG Partners LP (NASDAQ:GMLP), which was worth $14.5 million at the end of the third quarter. On the second spot was 683 Capital Partners which amassed $2.9 million worth of shares. Renaissance Technologies, Solas Capital Management, and Arrowstreet Capital 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 Huber Capital Management allocated the biggest weight to Golar LNG Partners LP (NASDAQ:GMLP), around 2.67% of its 13F portfolio. Solas Capital Management is also relatively very bullish on the stock, dishing out 1.42 percent of its 13F equity portfolio to GMLP.
Since Golar LNG Partners LP (NASDAQ:GMLP) has experienced a decline in interest from the aggregate hedge fund industry, it's easy to see that there was a specific group of funds that decided to sell off their positions entirely heading into Q4. It's worth mentioning that Israel Englander's Millennium Management dropped the largest position of all the hedgies monitored by Insider Monkey, totaling an estimated $0.5 million in stock. Matthew Hulsizer's fund, PEAK6 Capital Management, also sold off its stock, about $0.4 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to Golar LNG Partners LP (NASDAQ:GMLP). We will take a look at Sunlands Technology Group (NYSE:STG), Altus Midstream Company (NASDAQ:ALTM), Ares Commercial Real Estate Corp (NYSE:ACRE), and Limoneira Company (NASDAQ:LMNR). This group of stocks' market caps are similar to GMLP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STG,2,445,0 ALTM,3,1426,0 ACRE,10,20465,0 LMNR,1,210,0 Average,4,5637,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $23 million in GMLP's case. Ares Commercial Real Estate Corp (NYSE:ACRE) is the most popular stock in this table. On the other hand Limoneira Company (NASDAQ:LMNR) is the least popular one with only 1 bullish hedge fund positions. Golar LNG Partners LP (NASDAQ:GMLP) is not the most popular stock in this group but hedge fund interest is still above average. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but beat the market by 14.2 percentage points. Unfortunately GMLP wasn't nearly as popular as these 10 stocks and hedge funds that were betting on GMLP were disappointed as the stock returned -9.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.