Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That's why we pay special attention to hedge fund activity in these stocks.
National Fuel Gas Company (NYSE:NFG) has seen an increase in enthusiasm from smart money recently. Our calculations also showed that NFG isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are many indicators stock market investors have at their disposal to evaluate their stock investments. A couple of the most useful indicators are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best fund managers can outpace the S&P 500 by a solid amount (see the details here).
Let's take a peek at the fresh hedge fund action encompassing National Fuel Gas Company (NYSE:NFG).
What have hedge funds been doing with National Fuel Gas Company (NYSE:NFG)?
Heading into the third quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in NFG a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in National Fuel Gas Company (NYSE:NFG) was held by GAMCO Investors, which reported holding $122.7 million worth of stock at the end of March. It was followed by Millennium Management with a $26.5 million position. Other investors bullish on the company included Winton Capital Management, GLG Partners, and Private Capital Management.
Consequently, key money managers were breaking ground themselves. ExodusPoint Capital, managed by Michael Gelband, established the largest position in National Fuel Gas Company (NYSE:NFG). ExodusPoint Capital had $3.2 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also initiated a $1.7 million position during the quarter. The other funds with new positions in the stock are Matthew Tewksbury's Stevens Capital Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Bruce Kovner's Caxton Associates LP.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as National Fuel Gas Company (NYSE:NFG) but similarly valued. These stocks are Western Alliance Bancorporation (NYSE:WAL), MAXIMUS, Inc. (NYSE:MMS), First Horizon National Corporation (NYSE:FHN), and OneMain Holdings Inc (NYSE:OMF). This group of stocks' market values match NFG's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WAL,27,294906,-1 MMS,22,218927,2 FHN,23,210330,7 OMF,27,359958,-4 Average,24.75,271030,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $271 million. That figure was $241 million in NFG's case. Western Alliance Bancorporation (NYSE:WAL) is the most popular stock in this table. On the other hand MAXIMUS, Inc. (NYSE:MMS) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks National Fuel Gas Company (NYSE:NFG) is even less popular than MMS. Hedge funds dodged a bullet by taking a bearish stance towards NFG. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately NFG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); NFG investors were disappointed as the stock returned -10.2% during the third quarter 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 in 2019.
Disclosure: None. This article was originally published at Insider Monkey.