Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: National Fuel Gas Co. (NYSE:NFG).
Is National Fuel Gas Co. (NYSE:NFG) a great investment now? Hedge funds are getting more bullish. The number of bullish hedge fund bets rose by 11 recently. NFG was in 22 hedge funds’ portfolios at the end of the third quarter of 2015. There were 11 hedge funds in our database with NFG holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Western Refining, Inc. (NYSE:WNR), Chicago Bridge & Iron Company N.V. (NYSE:CBI), and Trimble Navigation Limited (NASDAQ:TRMB) to gather more data points.
Follow National Fuel Gas Co (NYSE:NFG)
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Now, we’re going to take a peek at the new action regarding National Fuel Gas Co. (NYSE:NFG).
What have hedge funds been doing with National Fuel Gas Co. (NYSE:NFG)?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 100% from the second quarter. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Soroban Capital Partners, managed by Eric W. Mandelblatt, holds the number one position in National Fuel Gas Co. (NYSE:NFG). Soroban Capital Partners has a $209.9 million position in the stock, comprising 1.5% of its 13F portfolio. On Soroban Capital Partners’ heels is GAMCO Investors, managed by Mario Gabelli, which holds a $172.6 million position; 1.1% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish contain Gregg J. Powers’ Private Capital Management, and Israel Englander’s Millennium Management.
Consequently, key hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, created the most outsized call position in National Fuel Gas Co. (NYSE:NFG). Millennium Management had $14.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $11.6 million investment in the stock during the quarter. The other funds with brand new NFG positions are Glenn Russell Dubin’s Highbridge Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as National Fuel Gas Co. (NYSE:NFG) but similarly valued. We will take a look at Western Refining, Inc. (NYSE:WNR), Chicago Bridge & Iron Company N.V. (NYSE:CBI), Trimble Navigation Limited (NASDAQ:TRMB), and Genesis Energy, L.P. (NYSE:GEL). This group of stocks’ market valuations resemble NFG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WNR | 30 | 471812 | 5 |
| CBI | 27 | 625585 | 1 |
| TRMB | 25 | 274118 | 7 |
| GEL | 7 | 30455 | 0 |
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $350 million. That figure was $456 million in NFG’s case. Western Refining, Inc. (NYSE:WNR) is the most popular stock in this table. On the other hand Genesis Energy, L.P. (NYSE:GEL) is the least popular one with only 7 bullish hedge fund positions. National Fuel Gas Co. (NYSE:NFG) 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. In this regard WNR might be a better candidate to consider a long position.
