Do Hedge Funds Love Genesis Energy, L.P. (GEL)?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Genesis Energy, L.P. (NYSE:GEL).

Is Genesis Energy, L.P. (NYSE:GEL) a buy right now? Investors who are in the know were getting more bullish. The number of bullish hedge fund positions went up by 1 lately. Genesis Energy, L.P. (NYSE:GEL) was in 5 hedge funds’ portfolios at the end of March. The all time high for this statistic is 10. Our calculations also showed that GEL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Peter Rathjens of Arrowstreet Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to take a look at the fresh hedge fund action surrounding Genesis Energy, L.P. (NYSE:GEL).

Do Hedge Funds Think GEL Is A Good Stock To Buy Now?

At Q1’s end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from one quarter earlier. By comparison, 4 hedge funds held shares or bullish call options in GEL 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 Genesis Energy, L.P. (NYSE:GEL) was held by Knighthead Capital, which reported holding $4.9 million worth of stock at the end of December. It was followed by Intrinsic Edge Capital with a $2.8 million position. Other investors bullish on the company included Arrowstreet Capital, Springhouse Capital Management, and Granite Point Capital. In terms of the portfolio weights assigned to each position Springhouse Capital Management allocated the biggest weight to Genesis Energy, L.P. (NYSE:GEL), around 1.07% of its 13F portfolio. Knighthead Capital is also relatively very bullish on the stock, designating 0.76 percent of its 13F equity portfolio to GEL.

Consequently, specific money managers were breaking ground themselves. Intrinsic Edge Capital, managed by Mark Coe, initiated the biggest position in Genesis Energy, L.P. (NYSE:GEL). Intrinsic Edge Capital had $2.8 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Genesis Energy, L.P. (NYSE:GEL) but similarly valued. These stocks are Hibbett Sports, Inc. (NASDAQ:HIBB), SMART Global Holdings, Inc. (NASDAQ:SGH), Berkshire Hills Bancorp, Inc. (NYSE:BHLB), Diversified Healthcare Trust (NASDAQ:DHC), Oceaneering International, Inc. (NYSE:OII), RadNet Inc. (NASDAQ:RDNT), and Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC). All of these stocks’ market caps resemble GEL’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.6 hedge funds with bullish positions and the average amount invested in these stocks was $111 million. That figure was $11 million in GEL’s case. Oceaneering International, Inc. (NYSE:OII) is the most popular stock in this table. On the other hand Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Genesis Energy, L.P. (NYSE:GEL) is even less popular than TRHC. Our overall hedge fund sentiment score for GEL is 21. 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. Hedge funds clearly dropped the ball on GEL as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. A small number of hedge funds were also right about betting on GEL as the stock returned 17.3% since Q1 (through June 18th) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.