Hedge Funds Are Dumping Cheniere Energy, Inc. (LNG)

Before we spend many hours researching a company, we like to analyze what hedge funds and billionaire investors think of the stock first. We like to do so because the elite investors’ consensus returns have been exceptional. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the 12 months ending on October 30.63% of these 30 stocks outperformed the market. Although the elite funds occasionally have their duds, such as Micron and Anadarko Petroleum, which fell by 50% and 26% respectively during the same time period, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Cheniere Energy, Inc. (NYSEMKT:LNG).

Cheniere Energy, Inc. (NYSEMKT:LNG) investors should pay attention to a decrease in support from the world’s most elite money managers of late, with 14 less firms being long Cheniere on September 30 than there were on June 30. At the end of this article we will also compare LNG to other stocks including Agilent Technologies Inc. (NYSE:A), Freescale Semiconductor Ltd (NYSE:FSL), and TransDigm Group Incorporated (NYSE:TDG) to get a better sense of its popularity.

In the financial world there are plenty of tools stock traders use to value publicly traded companies. A duo of the most innovative tools are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outpace the broader indices by a healthy amount (see the details here).

Keeping this in mind, we’re going to take a look at the recent action regarding Cheniere Energy, Inc. (NYSEMKT:LNG).

What have hedge funds been doing with Cheniere Energy, Inc. (NYSEMKT:LNG)?

Heading into Q4, a total of 62 of the hedge funds tracked by Insider Monkey held long positions in this stock, an 18% drop from the previous quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes considerably (or had already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Carl Icahn’s Icahn Capital LP has the biggest position in Cheniere Energy, Inc. (NYSEMKT:LNG), worth close to $1.38 billion, amounting to 4.9% of its total 13F portfolio. Sitting in the 2 spot is Baupost Group, led by Seth Klarman, holding a $1.09 billion position; the fund has 18.2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish comprise Andreas Halvorsen’s Viking Global, Stephen Mandel’s Lone Pine Capital, and D E Shaw.

Seeing as Cheniere Energy, Inc. (NYSEMKT:LNG) has experienced a declination in interest from the smart money, logic holds that there is a sect of hedgies that elected to cut their entire stakes by the end of the third quarter. It’s worth mentioning that Eric W. Mandelblatt’s Soroban Capital Partners said goodbye to the largest position of the “upper crust” of funds watched by Insider Monkey, totaling close to $361.7 million in stock, and Richard Perry’s Perry Capital was right behind this move, as the fund dumped about $226.2 million worth of shares. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 14 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks similar to Cheniere Energy, Inc. (NYSEMKT:LNG). These stocks are Agilent Technologies Inc. (NYSE:A), Freescale Semiconductor Ltd (NYSE:FSL), TransDigm Group Incorporated (NYSE:TDG), and KB Financial Group, Inc. (ADR) (NYSE:KB). This group of stocks’ market values are closest to LNG’s market value.

As you can see these stocks had an average of 32.5 hedge funds with bullish positions and the average amount invested in these stocks was $1343 million. That figure was $7123 million in LNG’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand KB Financial Group, Inc. (ADR) (NYSE:KB) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Cheniere Energy, Inc. (NYSEMKT:LNG) remains more popular among hedge funds, despite the Q3 drop in ownership. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.