Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Helix Energy Solutions Group Inc. (NYSE:HLX) based on that data and determine whether they were really smart about the stock.
Is Helix Energy Solutions Group Inc. (NYSE:HLX) an attractive stock to buy now? The smart money was getting less optimistic. The number of long hedge fund positions went down by 10 recently. Our calculations also showed that HLX 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). HLX was in 10 hedge funds' portfolios at the end of the first quarter of 2020. There were 20 hedge funds in our database with HLX holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
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 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a peek at the latest hedge fund action encompassing Helix Energy Solutions Group Inc. (NYSE:HLX).
What does smart money think about Helix Energy Solutions Group Inc. (NYSE:HLX)?
At Q1's end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -50% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in HLX a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Helix Energy Solutions Group Inc. (NYSE:HLX), which was worth $1.9 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $1.3 million worth of shares. Millennium Management, Balyasny Asset Management, and Alyeska Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Alyeska Investment Group allocated the biggest weight to Helix Energy Solutions Group Inc. (NYSE:HLX), around 0.01% of its 13F portfolio. Balyasny Asset Management is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to HLX.
Due to the fact that Helix Energy Solutions Group Inc. (NYSE:HLX) has experienced a decline in interest from the aggregate hedge fund industry, it's easy to see that there is a sect of hedge funds that slashed their full holdings in the first quarter. At the top of the heap, Paul Marshall and Ian Wace's Marshall Wace LLP dropped the biggest position of the "upper crust" of funds watched by Insider Monkey, totaling about $2.9 million in stock, and Peter Muller's PDT Partners was right behind this move, as the fund sold off about $1.4 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 10 funds in the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to Helix Energy Solutions Group Inc. (NYSE:HLX). We will take a look at Bicycle Therapeutics plc (NASDAQ:BCYC), Willdan Group, Inc. (NASDAQ:WLDN), Landcadia Holdings, Inc. (NASDAQ:LCAHU), and Sohu.com Limited (NASDAQ:SOHU). This group of stocks' market values resemble HLX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BCYC,6,33717,1 WLDN,6,8408,3 LCAHU,17,108456,0 SOHU,10,42493,-1 Average,9.75,48269,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $7 million in HLX's case. Landcadia Holdings, Inc. (NASDAQ:LCAHU) is the most popular stock in this table. On the other hand Bicycle Therapeutics plc (NASDAQ:BCYC) is the least popular one with only 6 bullish hedge fund positions. Helix Energy Solutions Group Inc. (NYSE:HLX) 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 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on HLX as the stock returned 111.6% in Q2 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.