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Hedge Fund Sentiment Is Stagnant On TransGlobe Energy Corporation (TGA)

Debasis Saha

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of TransGlobe Energy Corporation (NASDAQ:TGA) based on that data.

Hedge fund interest in TransGlobe Energy Corporation (NASDAQ:TGA) 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 Mereo BioPharma Group plc (NASDAQ:MREO), Perceptron, Inc. (NASDAQ:PRCP), and Riot Blockchain, Inc (NASDAQ:RIOT) to gather more data points. Our calculations also showed that TGA 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 eyes of most investors, hedge funds are assumed to be worthless, old financial tools of yesteryear. While there are greater than 8000 funds in operation at present, Our researchers look at the moguls of this club, approximately 850 funds. Most estimates calculate that this group of people command bulk of the hedge fund industry's total asset base, and by shadowing their best stock picks, Insider Monkey has revealed a number of investment strategies that have historically outstripped the market. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

[caption id="attachment_258236" align="aligncenter" width="400"] Ken Griffin of Citadel Investment Group[/caption]

Ken Griffin

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. With all of this in mind we're going to take a gander at the key hedge fund action encompassing TransGlobe Energy Corporation (NASDAQ:TGA).

What does smart money think about TransGlobe Energy Corporation (NASDAQ:TGA)?

Heading into the second quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TGA over the last 18 quarters. With the smart money's capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

Is TGA A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Renaissance Technologies,holds the number one position in TransGlobe Energy Corporation (NASDAQ:TGA). Renaissance Technologies has a $1.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Bradley Louis Radoff of Fondren Management, with a $1 million position; 2.4% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include John Overdeck and David Siegel's Two Sigma Advisors, Ken Griffin's Citadel Investment Group and . In terms of the portfolio weights assigned to each position Fondren Management allocated the biggest weight to TransGlobe Energy Corporation (NASDAQ:TGA), around 2.44% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.001 percent of its 13F equity portfolio to TGA.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as TransGlobe Energy Corporation (NASDAQ:TGA) but similarly valued. We will take a look at Mereo BioPharma Group plc (NASDAQ:MREO), Perceptron, Inc. (NASDAQ:PRCP), Riot Blockchain, Inc (NASDAQ:RIOT), and Kelso Technologies Inc (NYSE:KIQ). This group of stocks' market caps are similar to TGA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MREO,1,187,-1 PRCP,5,10378,0 RIOT,3,521,1 KIQ,1,10,0 Average,2.5,2774,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.5 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $2 million in TGA's case. Perceptron, Inc. (NASDAQ:PRCP) is the most popular stock in this table. On the other hand Mereo BioPharma Group plc (NASDAQ:MREO) is the least popular one with only 1 bullish hedge fund positions. TransGlobe Energy Corporation (NASDAQ:TGA) is not the most popular stock in this group but hedge fund interest is still above average. 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on TGA as the stock returned 47.5% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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