Does National Fuel Gas Co. (NYSE:NFG) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and invest millions of dollars on research activities, so it is no wonder they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.
Hedge fund ownership of National Fuel Gas Co. (NYSE:NFG) surged in Q2 by 42% as multiple leading hedge funds bought into the diversified E&P company. Nonetheless, overall hedge fund ownership remains low as just 2.6% of the funds tracked in our custom database owned shares of the company in the middle of 2018. National Fuel ranked highly on our list of the 25 Best Dividend Stocks for Retirement, having paid out dividends for each of the past 48 years. Its dividend currently yields a solid 3.18% annually.
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 flagship best performing hedge funds strategy returned 17.4% year to date and outperformed the market by more than 14 percentage points this year. This strategy also outperformed the market by 3 percentage points in the fourth quarter despite the market volatility (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
What does the smart money think about National Fuel Gas Co. (NYSE:NFG)?
Heading into the fourth quarter of 2018, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 42% jump from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in NFG in the middle of 2017. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Mario Gabelli’s GAMCO Investors has the number one position in National Fuel Gas Co. (NYSE:NFG), worth close to $142.9 million, accounting for 1% of its total 13F portfolio. On GAMCO Investors’ heels is Jim Simons of Renaissance Technologies, with a $20.6 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other peers that are bullish comprise Gregg J. Powers’ Private Capital Management, Roger Ibbotson’s Zebra Capital Management and Joe Huber’s Huber Capital Management.
As aggregate interest increased, key money managers were leading the bulls’ herd. GLG Partners, managed by Noam Gottesman, created the biggest position in National Fuel Gas Co. (NYSE:NFG). GLG Partners had $3.6 million invested in the company at the end of the quarter. Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital also made a $0.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Benjamin A. Smith’s Laurion Capital Management, and D E Shaw.
Let’s also examine hedge fund activity in other stocks similar to National Fuel Gas Co. (NYSE:NFG). These stocks are Algonquin Power & Utilities Corp. (NYSE:AQN), Dun & Bradstreet Corp (NYSE:DNB), Texas Capital Bancshares Inc (NASDAQ:TCBI), and Sogou Inc. (NYSE:SOGO). This group of stocks’ market valuations are closest to NFG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AQN | 6 | 36786 | 0 |
| DNB | 24 | 428530 | 0 |
| TCBI | 17 | 438809 | 7 |
| SOGO | 9 | 14455 | 3 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $230 million. That figure was $210 million in NFG’s case. Dun & Bradstreet Corp (NYSE:DNB) is the most popular stock in this table. On the other hand Algonquin Power & Utilities Corp. (NYSE:AQN) is the least popular one with only 6 bullish hedge fund positions. National Fuel Gas Co. (NYSE:NFG) 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 DNB might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
