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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about TransGlobe Energy Corporation (NASDAQ:TGA) in this article.
Is TransGlobe Energy (TGA) a good stock to buy now? Hedge fund interest in TGA shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that TGA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare TGA to other stocks including PLx Pharma Inc. (NASDAQ:PLXP), Cincinnati Bancorp, Inc. (NASDAQ:CNNB), and National Holdings Corporation (NASDAQ:NHLD) to get a better sense of its popularity.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.
David Siegel of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we're going to go over the new hedge fund action regarding TransGlobe Energy Corporation (NASDAQ:TGA).
How have hedgies been trading TransGlobe Energy Corporation (NASDAQ:TGA)?
At the end of September, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 3 hedge funds held shares or bullish call options in TGA a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in TransGlobe Energy Corporation (NASDAQ:TGA) was held by Renaissance Technologies, which reported holding $1.3 million worth of stock at the end of September. It was followed by Fondren Management with a $0.2 million position. Other investors bullish on the company included Citadel Investment Group, Two Sigma Advisors, and Millennium Management. In terms of the portfolio weights assigned to each position Fondren Management allocated the biggest weight to TransGlobe Energy Corporation (NASDAQ:TGA), around 1.2% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0013 percent of its 13F equity portfolio to TGA.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's also examine hedge fund activity in other stocks similar to TransGlobe Energy Corporation (NASDAQ:TGA). These stocks are PLx Pharma Inc. (NASDAQ:PLXP), Cincinnati Bancorp, Inc. (NASDAQ:CNNB), National Holdings Corporation (NASDAQ:NHLD), Bioline RX Ltd (NASDAQ:BLRX), BioCardia, Inc. (NASDAQ:BCDA), Air T, Inc. (NASDAQ:AIRT), and NCS Multistage Holdings, Inc. (NASDAQ:NCSM). This group of stocks' market values match TGA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PLXP,3,5137,0 CNNB,1,301,0 NHLD,2,138,0 BLRX,5,3894,0 BCDA,1,756,-1 AIRT,1,1860,0 NCSM,4,133,-2 Average,2.4,1746,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.4 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $2 million in TGA's case. Bioline RX Ltd (NASDAQ:BLRX) is the most popular stock in this table. On the other hand Cincinnati Bancorp, Inc. (NASDAQ:CNNB) is the least popular one with only 1 bullish hedge fund positions. TransGlobe Energy Corporation (NASDAQ:TGA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TGA is 85. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on TGA as the stock returned 29.3% since the end of Q3 (through 11/27) 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.