Is Golar LNG Limited (NASDAQ:GLNG) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Golar LNG Limited (NASDAQ:GLNG) shareholders have witnessed a decrease in support from the world’s most elite money managers in recent months. Our calculations also showed that GLNG isn’t among the 30 most popular stocks among hedge funds.
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 view the recent hedge fund action regarding Golar LNG Limited (NASDAQ:GLNG).
What have hedge funds been doing with Golar LNG Limited (NASDAQ:GLNG)?
At Q4’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from one quarter earlier. On the other hand, there were a total of 27 hedge funds with a bullish position in GLNG a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Golar LNG Limited (NASDAQ:GLNG) was held by Orbis Investment Management, which reported holding $194.2 million worth of stock at the end of December. It was followed by Luxor Capital Group with a $40.3 million position. Other investors bullish on the company included Renaissance Technologies, Pelham Capital, and Millennium Management.
Judging by the fact that Golar LNG Limited (NASDAQ:GLNG) has experienced a decline in interest from hedge fund managers, we can see that there were a few hedge funds who were dropping their positions entirely last quarter. At the top of the heap, Malcolm Fairbairn’s Ascend Capital said goodbye to the largest position of the “upper crust” of funds monitored by Insider Monkey, valued at an estimated $31 million in stock. Josh Donfeld and David Rogers’s fund, Castle Hook Partners, also cut its stock, about $14.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Golar LNG Limited (NASDAQ:GLNG). We will take a look at Allakos Inc. (NASDAQ:ALLK), Watts Water Technologies Inc (NYSE:WTS), Sanderson Farms, Inc. (NASDAQ:SAFM), and Novanta Inc. (NASDAQ:NOVT). All of these stocks’ market caps are closest to GLNG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALLK | 10 | 195505 | -2 |
| WTS | 17 | 273895 | 2 |
| SAFM | 13 | 358982 | -2 |
| NOVT | 19 | 105167 | 2 |
| Average | 14.75 | 233387 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $233 million. That figure was $502 million in GLNG’s case. Novanta Inc. (NASDAQ:NOVT) is the most popular stock in this table. On the other hand Allakos Inc. (NASDAQ:ALLK) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Golar LNG Limited (NASDAQ:GLNG) is more popular among hedge funds. 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 GLNG wasn’t nearly as popular as these 15 stock and hedge funds that were betting on GLNG were disappointed as the stock returned -5.1% 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.
