Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 24.4% during the first 9 months of 2019 and outperformed the broader market benchmark by 4 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Teekay LNG Partners L.P. (NYSE:TGP) shareholders have witnessed an increase in support from the world’s most elite money managers of late. Our calculations also showed that TGP isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are plenty of metrics market participants put to use to appraise their stock investments. A couple of the best metrics are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the elite money managers can trounce the broader indices by a very impressive amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the new hedge fund action regarding Teekay LNG Partners L.P. (NYSE:TGP).
Hedge fund activity in Teekay LNG Partners L.P. (NYSE:TGP)
Heading into the third quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. By comparison, 7 hedge funds held shares or bullish call options in TGP a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Cobalt Capital Management held the most valuable stake in Teekay LNG Partners L.P. (NYSE:TGP), which was worth $14.4 million at the end of the second quarter. On the second spot was Greenlight Capital which amassed $12 million worth of shares. Moreover, Royce & Associates, Citadel Investment Group, and Renaissance Technologies were also bullish on Teekay LNG Partners L.P. (NYSE:TGP), allocating a large percentage of their portfolios to this stock.
Consequently, some big names were breaking ground themselves. Renaissance Technologies assembled the most outsized position in Teekay LNG Partners L.P. (NYSE:TGP). Renaissance Technologies had $1.6 million invested in the company at the end of the quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Teekay LNG Partners L.P. (NYSE:TGP) but similarly valued. We will take a look at Funko, Inc. (NASDAQ:FNKO), Central European Media Enterprises Ltd. (NASDAQ:CETV), NIC Inc. (NASDAQ:EGOV), and Kenon Holdings Ltd. (NYSE:KEN). This group of stocks’ market valuations are similar to TGP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FNKO | 17 | 97217 | 1 |
| CETV | 8 | 9824 | 1 |
| EGOV | 17 | 90209 | -1 |
| KEN | 1 | 1980 | -1 |
| Average | 10.75 | 49808 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $44 million in TGP’s case. Funko, Inc. (NASDAQ:FNKO) is the most popular stock in this table. On the other hand Kenon Holdings Ltd. (NYSE:KEN) is the least popular one with only 1 bullish hedge fund positions. Teekay LNG Partners L.P. (NYSE:TGP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately TGP wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TGP investors were disappointed as the stock returned -1.9% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
