It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Star Bulk Carriers Corp. (NASDAQ:SBLK) during the quarter below.
Is Star Bulk Carriers Corp. (NASDAQ:SBLK) a marvelous investment today? Investors who are in the know are in an optimistic mood. The number of long hedge fund bets inched up by 3 recently. Our calculations also showed that sblk isn’t among the 30 most popular stocks among hedge funds. SBLK was in 19 hedge funds’ portfolios at the end of December. There were 16 hedge funds in our database with SBLK 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 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a glance at the latest hedge fund action encompassing Star Bulk Carriers Corp. (NASDAQ:SBLK).
Hedge fund activity in Star Bulk Carriers Corp. (NASDAQ:SBLK)
At the end of the fourth quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in SBLK a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Oaktree Capital Management held the most valuable stake in Star Bulk Carriers Corp. (NASDAQ:SBLK), which was worth $312.2 million at the end of the fourth quarter. On the second spot was Impala Asset Management which amassed $35 million worth of shares. Moreover, York Capital Management, Valueworks LLC, and Renaissance Technologies were also bullish on Star Bulk Carriers Corp. (NASDAQ:SBLK), allocating a large percentage of their portfolios to this stock.
Consequently, some big names were breaking ground themselves. Valueworks LLC, managed by Charles Lemonides, assembled the biggest position in Star Bulk Carriers Corp. (NASDAQ:SBLK). Valueworks LLC had $28.3 million invested in the company at the end of the quarter. Daniel Gold’s QVT Financial also initiated a $1.7 million position during the quarter. The other funds with brand new SBLK positions are Ken Griffin’s Citadel Investment Group, Matthew Hulsizer’s PEAK6 Capital Management, and Minhua Zhang’s Weld Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Star Bulk Carriers Corp. (NASDAQ:SBLK) but similarly valued. These stocks are Sandstorm Gold Ltd. (NYSE:SAND), Milacron Holdings Corp (NYSE:MCRN), Apogee Enterprises, Inc. (NASDAQ:APOG), and Tactile Systems Technology, Inc. (NASDAQ:TCMD). All of these stocks’ market caps resemble SBLK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SAND | 9 | 42972 | -1 |
| MCRN | 22 | 56001 | 5 |
| APOG | 16 | 115597 | -1 |
| TCMD | 14 | 39982 | 4 |
| Average | 15.25 | 63638 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $456 million in SBLK’s case. Milacron Holdings Corp (NYSE:MCRN) is the most popular stock in this table. On the other hand Sandstorm Gold Ltd. (NYSE:SAND) is the least popular one with only 9 bullish hedge fund positions. Star Bulk Carriers Corp. (NASDAQ:SBLK) 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. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately SBLK wasn’t nearly as popular as these 15 stock and hedge funds that were betting on SBLK were disappointed as the stock returned -12.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
