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Do Hedge Funds Love Black Hills Corporation (BKH)?

Reymerlyn Martin

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in October, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about Black Hills Corporation (NYSE:BKH) in this article.

Is Black Hills Corporation (NYSE:BKH) going to take off soon? Money managers are getting more bullish. The number of long hedge fund bets rose by 5 recently. Our calculations also showed that BKH isn't among the 30 most popular stocks among hedge funds. BKH was in 19 hedge funds' portfolios at the end of September. There were 14 hedge funds in our database with BKH positions at the end of the previous quarter.

In the financial world there are many gauges stock market investors use to assess stocks. A duo of the best gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top money managers can outpace the broader indices by a solid amount (see the details here).

GAMCO Investors, Mario Gabelli

We're going to take a glance at the latest hedge fund action regarding Black Hills Corporation (NYSE:BKH).

Hedge fund activity in Black Hills Corporation (NYSE:BKH)

Heading into the fourth quarter of 2018, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BKH over the last 13 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

BKH_dec2018

The largest stake in Black Hills Corporation (NYSE:BKH) was held by Adage Capital Management, which reported holding $66.8 million worth of stock at the end of September. It was followed by D E Shaw with a $50.1 million position. Other investors bullish on the company included GAMCO Investors, Millennium Management, and Blackstart Capital.

Now, key money managers have jumped into Black Hills Corporation (NYSE:BKH) headfirst. Shelter Harbor Advisors, managed by Peter J. Hark, established the most outsized position in Black Hills Corporation (NYSE:BKH). Shelter Harbor Advisors had $2.9 million invested in the company at the end of the quarter. Matthew Tewksbury's Stevens Capital Management also made a $2.2 million investment in the stock during the quarter. The other funds with brand new BKH positions are Michael Platt and William Reeves's BlueCrest Capital Mgmt., Matthew Hulsizer's PEAK6 Capital Management, and Steve Cohen's Point72 Asset Management.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Black Hills Corporation (NYSE:BKH) but similarly valued. These stocks are Red Rock Resorts, Inc. (NASDAQ:RRR), Focus Financial Partners Inc. (NASDAQ:FOCS), Graham Holdings Co (NYSE:GHC), and Kennedy-Wilson Holdings Inc (NYSE:KW). This group of stocks' market valuations are similar to BKH's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RRR,21,465749,-1 FOCS,12,380308,12 GHC,17,587023,-5 KW,12,461812,3 Average,15.5,473723,2.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $474 million. That figure was $192 million in BKH's case. Red Rock Resorts, Inc. (NASDAQ:RRR) is the most popular stock in this table. On the other hand 0 is the least popular one with only 12 bullish hedge fund positions. Black Hills Corporation (NYSE:BKH) 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. In this regard RRR might be a better candidate to consider a long position.

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

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