Before we spend many hours researching a company, we’d like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of SRC Energy Inc. (NYSE:SRCI).
Is SRC Energy Inc. (NYSE:SRCI) a healthy stock for your portfolio? Investors who are in the know are getting more bullish. The number of long hedge fund bets improved by 2 lately. Our calculations also showed that srci isn’t among the 30 most popular stocks among hedge funds. SRCI was in 15 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with SRCI positions at the end of the previous quarter.
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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s review the latest hedge fund action encompassing SRC Energy Inc. (NYSE:SRCI).
What have hedge funds been doing with SRC Energy Inc. (NYSE:SRCI)?
Heading into the fourth quarter of 2018, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the second quarter of 2018. By comparison, 12 hedge funds held shares or bullish call options in SRCI heading into this year. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, SailingStone Capital Partners was the largest shareholder of SRC Energy Inc. (NYSE:SRCI), with a stake worth $228.4 million reported as of the end of September. Trailing SailingStone Capital Partners was Encompass Capital Advisors, which amassed a stake valued at $36.9 million. Fine Capital Partners, D E Shaw, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Millennium Management, managed by Israel Englander, established the biggest position in SRC Energy Inc. (NYSE:SRCI). Millennium Management had $18.7 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $5.2 million investment in the stock during the quarter. The other funds with brand new SRCI positions are Dmitry Balyasny’s Balyasny Asset Management, John M. Angelo and Michael L. Gordon’s Angelo Gordon & Co, and Brandon Haley’s Holocene Advisors.
Let’s check out hedge fund activity in other stocks similar to SRC Energy Inc. (NYSE:SRCI). These stocks are Steelcase Inc. (NYSE:SCS), Tellurian Inc. (NASDAQ:TELL), Tower Semiconductor Ltd. (NASDAQ:TSEM), and trivago N.V. (NASDAQ:TRVG). All of these stocks’ market caps are similar to SRCI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SCS | 19 | 131526 | 4 |
| TELL | 14 | 76226 | -1 |
| TSEM | 13 | 286560 | 0 |
| TRVG | 9 | 171444 | 2 |
| Average | 13.75 | 166439 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $367 million in SRCI’s case. Steelcase Inc. (NYSE:SCS) is the most popular stock in this table. On the other hand trivago N.V. (NASDAQ:TRVG) is the least popular one with only 9 bullish hedge fund positions. SRC Energy Inc. (NYSE:SRCI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SCS might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
