It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 5.7% in the 12 months ending October 26 (including dividend payments). Conversely, hedge funds’ 30 preferred S&P 500 stocks (as of June 2018) generated a return of 15.1% during the same 12-month period, with 53% of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like SilverBow Resorces, Inc. (NYSE:SBOW).
SilverBow Resorces, Inc. (NYSE:SBOW) shareholders have witnessed an increase in enthusiasm from smart money of late. SBOW was in 11 hedge funds’ portfolios at the end of September. There were 7 hedge funds in our database with SBOW holdings at the end of the previous quarter. Our calculations also showed that sbow isn’t among the 30 most popular stocks among hedge funds.
In the eyes of most market participants, hedge funds are seen as slow, old investment vehicles of years past. While there are over 8,000 funds in operation today, Our experts choose to focus on the crème de la crème of this group, around 700 funds. These investment experts manage the majority of all hedge funds’ total asset base, and by tailing their unrivaled investments, Insider Monkey has determined a number of investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by 6 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
We’re going to take a glance at the key hedge fund action regarding SilverBow Resorces, Inc. (NYSE:SBOW).
How are hedge funds trading SilverBow Resorces, Inc. (NYSE:SBOW)?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 57% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SBOW over the last 13 quarters. 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 SilverBow Resorces, Inc. (NYSE:SBOW) was held by Strategic Value Partners, which reported holding $119.4 million worth of stock at the end of September. It was followed by DW Partners with a $46.1 million position. Other investors bullish on the company included Pentwater Capital Management, GLG Partners, and Prescott Group Capital Management.
Consequently, key hedge funds have been driving this bullishness. Bailard Inc, managed by Thomas Bailard, established the largest position in SilverBow Resorces, Inc. (NYSE:SBOW). Bailard Inc had $0.4 million invested in the company at the end of the quarter. Roger Ibbotson’s Zebra Capital Management also initiated a $0.3 million position during the quarter. The only other fund with a new position in the stock is Ken Griffin’s Citadel Investment Group.
Let’s check out hedge fund activity in other stocks similar to SilverBow Resorces, Inc. (NYSE:SBOW). These stocks are Tocagen Inc. (NASDAQ:TOCA), Camtek LTD. (NASDAQ:CAMT), MedEquities Realty Trust, Inc. (NYSE:MRT), and Panhandle Oil and Gas Inc. (NYSE:PHX). This group of stocks’ market caps match SBOW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TOCA | 4 | 4656 | 0 |
| CAMT | 7 | 17567 | 1 |
| MRT | 12 | 41872 | 2 |
| PHX | 5 | 47051 | -1 |
| Average | 7 | 27787 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $188 million in SBOW’s case. MedEquities Realty Trust, Inc. (NYSE:MRT) is the most popular stock in this table. On the other hand Tocagen Inc. (NASDAQ:TOCA) is the least popular one with only 4 bullish hedge fund positions. SilverBow Resorces, Inc. (NYSE:SBOW) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MRT might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.