Insider Monkey finished processing more than 700 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2018. What do these smart investors think about National Fuel Gas Company (NYSE:NFG)?
Hedge fund interest in National Fuel Gas Company (NYSE:NFG) 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 Quanta Services Inc (NYSE:PWR), Amarin Corporation plc (NASDAQ:AMRN), and Cree, Inc. (NASDAQ:CREE) to gather more data points.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's go over the fresh hedge fund action encompassing National Fuel Gas Company (NYSE:NFG).
How are hedge funds trading National Fuel Gas Company (NYSE:NFG)?
Heading into the first quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NFG over the last 14 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Mario Gabelli's GAMCO Investors has the biggest position in National Fuel Gas Company (NYSE:NFG), worth close to $126.9 million, corresponding to 1.1% of its total 13F portfolio. The second largest stake is held by Private Capital Management, managed by Gregg J. Powers, which holds a $19.9 million position; the fund has 3.3% of its 13F portfolio invested in the stock. Remaining peers that hold long positions comprise David Harding's Winton Capital Management, D. E. Shaw's D E Shaw and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Judging by the fact that National Fuel Gas Company (NYSE:NFG) has faced declining sentiment from hedge fund managers, it's safe to say that there lies a certain "tier" of money managers that slashed their positions entirely by the end of the third quarter. At the top of the heap, Matthew Tewksbury's Stevens Capital Management dumped the largest stake of the "upper crust" of funds watched by Insider Monkey, totaling about $0.8 million in stock. Jeffrey Talpins's fund, Element Capital Management, also cut its stock, about $0.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine 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 Quanta Services Inc (NYSE:PWR), Amarin Corporation plc (NASDAQ:AMRN), Cree, Inc. (NASDAQ:CREE), and Empire State Realty Trust Inc (NYSE:ESRT). This group of stocks' market values resemble NFG's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PWR,27,477082,-7 AMRN,24,1242883,2 CREE,9,226703,-4 ESRT,13,160283,0 Average,18.25,526738,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $527 million. That figure was $217 million in NFG's case. Quanta Services Inc (NYSE:PWR) is the most popular stock in this table. On the other hand Cree, Inc. (NASDAQ:CREE) is the least popular one with only 9 bullish hedge fund positions. National Fuel Gas Company (NYSE:NFG) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on NFG, though not to the same extent, as the stock returned 17.2% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.