How Is Smart Money Trading Targa Resources Corp (TRGP)?

Does Targa Resources Corp (NYSE:TRGP) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund sentiment towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.

Targa Resources Corp shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 22 hedge funds’ portfolios at the end of the third quarter of 2015. At the end of this article we will also compare TRGP to other stocks, including Mentor Graphics Corp (NASDAQ:MENT), Progressive Waste Solutions Ltd (USA) (NYSE:BIN), and Enstar Group Ltd. (NASDAQ:ESGR) to get a better sense of its popularity.

If you’d ask most investors, hedge funds are viewed as worthless, outdated investment tools of years past. While there are over 8000 funds in operation at present, Our experts choose to focus on the masters of this club, about 700 funds. It is estimated that this group of investors have their hands on the lion’s share of the hedge fund industry’s total capital, and by shadowing their highest performing equity investments, Insider Monkey has unsheathed numerous investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Now, we’re going to take a gander at the fresh action surrounding Targa Resources Corp (NYSE:TRGP).

What does the smart money think about Targa Resources Corp (NYSE:TRGP)?

At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, flat from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Omega Advisors, managed by Leon Cooperman, holds the largest position in Targa Resources Corp (NYSE:TRGP). Omega Advisors has a $100.6 million position in the stock, comprising 2% of its 13F portfolio. The second largest stake is held by Highland Capital Management, managed by James Dondero, which holds a $29.3 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Ken Griffin’s Citadel Investment Group, Clint Carlson’s Carlson Capital and Israel Englander’s Millennium Management.

Seeing as Targa Resources Corp (NYSE:TRGP) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few money managers that decided to sell off their entire stakes in the third quarter. Intriguingly, Matthew Tewksbury’s Stevens Capital Management said goodbye to the largest stake of the 700 funds watched by Insider Monkey, comprising close to $1.6 million in stock, and Bernard Selz’s Selz Capital was right behind this move, as the fund said goodbye to about $1 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Targa Resources Corp (NYSE:TRGP). These stocks are Mentor Graphics Corp (NASDAQ:MENT), Progressive Waste Solutions Ltd (USA) (NYSE:BIN), Enstar Group Ltd. (NASDAQ:ESGR), and WGL Holdings Inc (NYSE:WGL). This group of stocks’ market values are similar to TRGP’s market value.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $310 million. That figure was $266 million in TRGP’s case. Mentor Graphics Corp (NASDAQ:MENT) is the most popular stock in this table. On the other hand, Enstar Group Ltd. (NASDAQ:ESGR) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Targa Resources Corp (NYSE:TRGP) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.