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In this article we will take a look at whether hedge funds think Eagle Bulk Shipping Inc. (NASDAQ:EGLE) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Eagle Bulk Shipping Inc. (NASDAQ:EGLE) a great investment today? Investors who are in the know were getting more optimistic. The number of bullish hedge fund bets moved up by 13 lately. Eagle Bulk Shipping Inc. (NASDAQ:EGLE) was in 25 hedge funds' portfolios at the end of June. The all time high for this statistic was previously 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EGLE isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Howard Marks of Oaktree Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let's view the recent hedge fund action surrounding Eagle Bulk Shipping Inc. (NASDAQ:EGLE).
Do Hedge Funds Think EGLE Is A Good Stock To Buy Now?
At Q2's end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 108% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in EGLE a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Eagle Bulk Shipping Inc. (NASDAQ:EGLE) was held by Oaktree Capital Management, which reported holding $178.9 million worth of stock at the end of June. It was followed by GoldenTree Asset Management with a $51.6 million position. Other investors bullish on the company included Two Sigma Advisors, Millennium Management, and Tudor Investment Corp. In terms of the portfolio weights assigned to each position Gratia Capital allocated the biggest weight to Eagle Bulk Shipping Inc. (NASDAQ:EGLE), around 2.84% of its 13F portfolio. Oaktree Capital Management is also relatively very bullish on the stock, dishing out 2.42 percent of its 13F equity portfolio to EGLE.
Consequently, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, established the most outsized position in Eagle Bulk Shipping Inc. (NASDAQ:EGLE). Millennium Management had $5.1 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also made a $4.7 million investment in the stock during the quarter. The following funds were also among the new EGLE investors: Jeffrey Talpins's Element Capital Management, Frank Fu's CaaS Capital, and Steve Pei's Gratia Capital.
Let's go over hedge fund activity in other stocks similar to Eagle Bulk Shipping Inc. (NASDAQ:EGLE). We will take a look at Digital Media Solutions, Inc. (NYSE:DMS), SunCoke Energy, Inc (NYSE:SXC), Viomi Technology Co., Ltd (NASDAQ:VIOT), The York Water Company (NASDAQ:YORW), Peapack-Gladstone Financial Corp (NASDAQ:PGC), Adagene Inc. (NASDAQ:ADAG), and Plymouth Industrial REIT, Inc. (NYSE:PLYM). This group of stocks' market caps are similar to EGLE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DMS,4,803,-5 SXC,19,83738,-3 VIOT,4,2355,-2 YORW,7,15104,3 PGC,14,50659,1 ADAG,7,13192,-3 PLYM,10,43109,2 Average,9.3,29851,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.3 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $279 million in EGLE's case. SunCoke Energy, Inc (NYSE:SXC) is the most popular stock in this table. On the other hand Digital Media Solutions, Inc. (NYSE:DMS) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Eagle Bulk Shipping Inc. (NASDAQ:EGLE) is more popular among hedge funds. Our overall hedge fund sentiment score for EGLE is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately EGLE wasn't nearly as popular as these 5 stocks and hedge funds that were betting on EGLE were disappointed as the stock returned -3.4% since the end of the second quarter (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.