We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: D E Shaw. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Springbok Capital).
Let’s go over hedge fund activity in other stocks similar to Spark Energy Inc (NASDAQ:SPKE). These stocks are Donegal Group Inc (NASDAQ:DGICA), Casella Waste Systems Inc. (NASDAQ:CWST), Independence Realty Trust Inc (NYSEMKT:IRT), and Stonegate Bank (NASDAQ:SGBK). This group of stocks’ market valuations resemble SPKE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DGICA | 3 | 5512 | -1 |
| CWST | 18 | 101181 | 3 |
| IRT | 22 | 138397 | 15 |
| SGBK | 15 | 47788 | 4 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $12 million in SPKE’s case. Independence Realty Trust Inc (NYSEMKT:IRT) is the most popular stock in this table. On the other hand Donegal Group Inc (NASDAQ:DGICA) is the least popular one with only 3 bullish hedge fund positions. Spark Energy Inc (NASDAQ:SPKE) 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 IRT might be a better candidate to consider taking a long position in.
Disclosure: None
