The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtTeekay LNG Partners L.P. (NYSE:TGP) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Is Teekay LNG Partners L.P. (NYSE:TGP) a superb investment now? Prominent investors were reducing their bets on the stock. The number of bullish hedge fund positions retreated by 3 recently. Our calculations also showed that TGP 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). Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_193003" align="aligncenter" width="400"] Chuck Royce of Royce & Associates[/caption]
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. With all of this in mind we're going to analyze the key hedge fund action surrounding Teekay LNG Partners L.P. (NYSE:TGP).
What does smart money think about Teekay LNG Partners L.P. (NYSE:TGP)?
Heading into the second quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from the fourth quarter of 2019. By comparison, 8 hedge funds held shares or bullish call options in TGP a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Ancient Art (Teton Capital), managed by Quincy Lee, holds the most valuable position in Teekay LNG Partners L.P. (NYSE:TGP). Ancient Art (Teton Capital) has a $11.3 million position in the stock, comprising 1.8% of its 13F portfolio. Sitting at the No. 2 spot is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $7.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism include Chuck Royce's Royce & Associates, David Einhorn's Greenlight Capital and Wayne Cooperman's Cobalt Capital Management. In terms of the portfolio weights assigned to each position Cobalt Capital Management allocated the biggest weight to Teekay LNG Partners L.P. (NYSE:TGP), around 2.44% of its 13F portfolio. Ancient Art (Teton Capital) is also relatively very bullish on the stock, earmarking 1.82 percent of its 13F equity portfolio to TGP.
Due to the fact that Teekay LNG Partners L.P. (NYSE:TGP) has experienced falling interest from the aggregate hedge fund industry, it's safe to say that there was a specific group of hedge funds that elected to cut their positions entirely heading into Q4. Intriguingly, Paul Marshall and Ian Wace's Marshall Wace LLP dropped the biggest stake of the "upper crust" of funds monitored by Insider Monkey, totaling about $0.8 million in stock, and Michael Gelband's ExodusPoint Capital was right behind this move, as the fund sold off about $0.5 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds heading into Q4.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Teekay LNG Partners L.P. (NYSE:TGP) but similarly valued. We will take a look at Perdoceo Education Corporation (NASDAQ:PRDO), Matthews International Corp (NASDAQ:MATW), Phreesia, Inc. (NYSE:PHR), and Five Point Holdings, LLC (NYSE:FPH). This group of stocks' market values are similar to TGP's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PRDO,23,141084,4 MATW,9,33381,0 PHR,8,51620,-8 FPH,13,174951,-2 Average,13.25,100259,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $38 million in TGP's case. Perdoceo Education Corporation (NASDAQ:PRDO) is the most popular stock in this table. On the other hand Phreesia, Inc. (NYSE:PHR) is the least popular one with only 8 bullish hedge fund positions. Teekay LNG Partners L.P. (NYSE:TGP) is not the least popular stock in this group but hedge fund interest is still below 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 beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on TGP, though not to the same extent, as the stock returned 21.6% during the second quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.