Is Helix Energy Solutions Group Inc. (NYSE:HLX) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Helix Energy Solutions Group Inc. (NYSE:HLX) investors should be aware of a decrease in support from the world’s most elite money managers recently. Our calculations also showed that HLX 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 40 percentage points since May 2014 through May 30, 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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a look at the latest hedge fund action encompassing Helix Energy Solutions Group Inc. (NYSE:HLX).
Hedge fund activity in Helix Energy Solutions Group Inc. (NYSE:HLX)
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HLX over the last 15 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Helix Energy Solutions Group Inc. (NYSE:HLX), which was worth $28.3 million at the end of the first quarter. On the second spot was Millennium Management which amassed $20.6 million worth of shares. Moreover, Marshall Wace LLP, Gotham Asset Management, and Arrowstreet Capital were also bullish on Helix Energy Solutions Group Inc. (NYSE:HLX), allocating a large percentage of their portfolios to this stock.
Because Helix Energy Solutions Group Inc. (NYSE:HLX) has witnessed a decline in interest from hedge fund managers, we can see that there is a sect of hedgies who were dropping their entire stakes last quarter. At the top of the heap, Michael A. Price and Amos Meron’s Empyrean Capital Partners cut the biggest position of the 700 funds followed by Insider Monkey, totaling close to $2.3 million in stock. Bernard Selz’s fund, Selz Capital, also cut its stock, about $1.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 2 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Helix Energy Solutions Group Inc. (NYSE:HLX). We will take a look at BMC Stock Holdings, Inc. (NASDAQ:BMCH), Studio City International Holdings Limited (NYSE:MSC), TherapeuticsMD Inc (OTC:TXMD), and Iovance Biotherapeutics, Inc. (NASDAQ:IOVA). This group of stocks’ market caps resemble HLX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BMCH | 29 | 209953 | 5 |
| MSC | 4 | 186155 | -1 |
| TXMD | 9 | 78464 | -1 |
| IOVA | 25 | 564470 | 3 |
| Average | 16.75 | 259761 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $260 million. That figure was $66 million in HLX’s case. BMC Stock Holdings, Inc. (NASDAQ:BMCH) is the most popular stock in this table. On the other hand Studio City International Holdings Limited (NYSE:MSC) is the least popular one with only 4 bullish hedge fund positions. Helix Energy Solutions Group Inc. (NYSE:HLX) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately HLX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); HLX investors were disappointed as the stock returned -0.5% during the same time period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
