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Is Hallador Energy Co (HNRG) A Good Stock To Buy?

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  • HNRG

We can judge whether Hallador Energy Co (NASDAQ:HNRG) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.

Hallador Energy Co (NASDAQ:HNRG) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds' portfolios at the end of the third quarter of 2019. At the end of this article we will also compare HNRG to other stocks including Jounce Therapeutics, Inc. (NASDAQ:JNCE), SB Financial Group, Inc. (NASDAQ:SBFG), and OncoCyte Corporation (NYSE:OCX) to get a better sense of its popularity.

5 Most Popular Stocks Among Hedge Funds
5 Most Popular Stocks Among Hedge Funds

Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are many gauges stock traders put to use to value stocks. Two of the most under-the-radar gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite investment managers can outperform the broader indices by a solid margin (see the details here).

[caption id="attachment_338410" align="aligncenter" width="500"]

Jeffrey Bronchick - Cove Street Capital
Jeffrey Bronchick - Cove Street Capital

Jeffrey Bronchick of Cove Street Capital[/caption]

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds' buy/sell signals. We're going to take a gander at the fresh hedge fund action encompassing Hallador Energy Co (NASDAQ:HNRG).

Hedge fund activity in Hallador Energy Co (NASDAQ:HNRG)

Heading into the fourth quarter of 2019, a total of 9 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 8 hedge funds with a bullish position in HNRG a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

The largest stake in Hallador Energy Co (NASDAQ:HNRG) was held by Renaissance Technologies, which reported holding $1.8 million worth of stock at the end of September. It was followed by Cove Street Capital with a $0.7 million position. Other investors bullish on the company included GLG Partners, Winton Capital Management, and Zebra Capital Management. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Hallador Energy Co (NASDAQ:HNRG), around 0.22% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, setting aside 0.1 percent of its 13F equity portfolio to HNRG.

Seeing as Hallador Energy Co (NASDAQ:HNRG) has witnessed bearish sentiment from the entirety of the hedge funds we track, it's easy to see that there were a few fund managers who sold off their entire stakes last quarter. At the top of the heap, Paul Marshall and Ian Wace's Marshall Wace said goodbye to the largest stake of the "upper crust" of funds followed by Insider Monkey, valued at about $0.2 million in stock. Jose Fernandez's fund, Stepstone Group, also dumped its stock, about $0 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's go over hedge fund activity in other stocks similar to Hallador Energy Co (NASDAQ:HNRG). These stocks are Jounce Therapeutics, Inc. (NASDAQ:JNCE), SB Financial Group, Inc. (NASDAQ:SBFG), OncoCyte Corporation (NYSE:OCX), and scPharmaceuticals Inc. (NASDAQ:SCPH). This group of stocks' market valuations are similar to HNRG's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JNCE,9,2064,-1 SBFG,3,11334,0 OCX,4,23596,-2 SCPH,5,41043,0 Average,5.25,19509,-0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $4 million in HNRG's case. Jounce Therapeutics, Inc. (NASDAQ:JNCE) is the most popular stock in this table. On the other hand SB Financial Group, Inc. (NASDAQ:SBFG) is the least popular one with only 3 bullish hedge fund positions. Hallador Energy Co (NASDAQ:HNRG) 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 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. Unfortunately HNRG wasn't nearly as popular as these 20 stocks and hedge funds that were betting on HNRG were disappointed as the stock returned -16.4% 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 many of these stocks already outperformed the market so far this year.

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

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