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Heartland Advisors: “Opportunities in Utilities Sector Exist; National Fuel Gas (NFG) is an Example”

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Heartland Advisors, an investment management firm, published its “Heartland Value Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 12.71% was delivered by the fund’s institutional class shares for the Q1 of 2021, below its Russell 2000® Value benchmark that delivered a 21.17% return for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Heartland Value Fund, in its Q1 2021 investor letter, mentioned National Fuel Gas Company (NYSE: NFG), and shared their insights on the company. National Fuel Gas Company is a Williamsville, New York-based natural gas distribution company that currently has a $4.7 billion market capitalization. Since the beginning of the year, NFG delivered a 26.96% return, extending its 12-month gains to 30.68%. As of May 13, 2021, the stock closed at $52.22 per share.

Here is what Heartland Value Fund has to say about National Fuel Gas Company in its Q1 2021 investor letter:

"The ho-hum Utilities sector isn’t typically a place to hunt for strong growth prospects. However, for investors willing to do their homework, opportunities do exist. Portfolio holding National Fuel Gas Company (NFG) is a prime example.

NFG is a dividend aristocrat—50 consecutive years of dividend increases. Although the business is lumped in with run-of-the-mill power companies, it is much more diverse. In addition to its utility operations, a pipeline and storage division produces almost a quarter of its profits, and the company generates nearly 40% of its bottom line from natural gas exploration and production.

Shares of NFG are trading at a mid-teens discount to their historic average based on price/book. Given the state of the energy industry over the past few years, we believe the company’s gas unit could be an overlooked source of growth. Additionally, the utility recently received regulatory approval on a natural gas pipeline expansion in Pennsylvania, which is expected to produce a windfall in free cash flow."

Pixabay/Public Domain

Our calculations show that National Fuel Gas Company (NYSE: NFG) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, National Fuel Gas Company was in 13 hedge fund portfolios, compared to 16 funds in the third quarter. NFG delivered an 18.71% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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