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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Targa Resources Corp (NYSE:TRGP).
Is TRGP a good stock to buy? Targa Resources Corp (NYSE:TRGP) was in 24 hedge funds' portfolios at the end of March. The all time high for this statistic is 35. TRGP shareholders have witnessed a decrease in support from the world's most elite money managers lately. There were 29 hedge funds in our database with TRGP positions at the end of the fourth quarter. Our calculations also showed that TRGP isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
At the moment there are tons of formulas shareholders have at their disposal to value stocks. A pair of the most under-the-radar formulas are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can beat the broader indices by a healthy amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Lee Ainslie of Maverick Capital
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Do Hedge Funds Think TRGP Is A Good Stock To Buy Now?
At first quarter's end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. By comparison, 29 hedge funds held shares or bullish call options in TRGP a year ago. With hedge funds' sentiment swirling, there exists a select group of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, Zimmer Partners was the largest shareholder of Targa Resources Corp (NYSE:TRGP), with a stake worth $124.7 million reported as of the end of March. Trailing Zimmer Partners was Two Sigma Advisors, which amassed a stake valued at $64.3 million. D E Shaw, Arrowstreet Capital, and Holocene Advisors 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 SIR Capital Management allocated the biggest weight to Targa Resources Corp (NYSE:TRGP), around 4.46% of its 13F portfolio. Yaupon Capital is also relatively very bullish on the stock, dishing out 2.96 percent of its 13F equity portfolio to TRGP.
Seeing as Targa Resources Corp (NYSE:TRGP) has experienced declining sentiment from the aggregate hedge fund industry, it's easy to see that there exists a select few money managers that elected to cut their full holdings in the first quarter. Intriguingly, Matt Smith's Deep Basin Capital cut the largest position of the "upper crust" of funds followed by Insider Monkey, comprising close to $22.9 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund dropped about $7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 5 funds in the first quarter.
Let's now review hedge fund activity in other stocks similar to Targa Resources Corp (NYSE:TRGP). We will take a look at Virgin Galactic Holdings, Inc. (NYSE:SPCE), Tripadvisor Inc (NASDAQ:TRIP), Phillips 66 Partners LP (NYSE:PSXP), Proofpoint Inc (NASDAQ:PFPT), OneMain Holdings Inc (NYSE:OMF), Mobile TeleSystems Public Joint Stock Company (NYSE:MBT), and Bumble Inc. (NASDAQ:BMBL). This group of stocks' market caps are closest to TRGP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SPCE,17,210974,-6 TRIP,45,1975906,4 PSXP,5,45200,1 PFPT,22,455170,-4 OMF,43,886893,13 MBT,11,295926,-2 BMBL,29,545734,29 Average,24.6,630829,5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.6 hedge funds with bullish positions and the average amount invested in these stocks was $631 million. That figure was $532 million in TRGP's case. Tripadvisor Inc (NASDAQ:TRIP) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 5 bullish hedge fund positions. Targa Resources Corp (NYSE:TRGP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TRGP is 44.3. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on TRGP as the stock returned 30.6% since the end of the first quarter (through 7/16) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.