Is Star Bulk Carriers Corp. (SBLK) Going to Burn These Hedge Funds?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Star Bulk Carriers Corp. (NASDAQ:SBLK), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Star Bulk Carriers Corp. (NASDAQ:SBLK) a bargain? Prominent investors were in a pessimistic mood. The number of bullish hedge fund positions shrunk by 3 in recent months. Star Bulk Carriers Corp. (NASDAQ:SBLK) was in 21 hedge funds’ portfolios at the end of September. The all time high for this statistic is 24. Our calculations also showed that SBLK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 24 hedge funds in our database with SBLK positions at the end of the second quarter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to analyze the latest hedge fund action regarding Star Bulk Carriers Corp. (NASDAQ:SBLK).

Howard Marks of Oaktree Capital

Do Hedge Funds Think SBLK Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SBLK over the last 25 quarters. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

The largest stake in Star Bulk Carriers Corp. (NASDAQ:SBLK) was held by Oaktree Capital Management, which reported holding $624.9 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $41.8 million position. Other investors bullish on the company included Impala Asset Management, No Street Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Oaktree Capital Management allocated the biggest weight to Star Bulk Carriers Corp. (NASDAQ:SBLK), around 9.07% of its 13F portfolio. No Street Capital is also relatively very bullish on the stock, dishing out 4.02 percent of its 13F equity portfolio to SBLK.

Since Star Bulk Carriers Corp. (NASDAQ:SBLK) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of hedgies that elected to cut their positions entirely by the end of the third quarter. Intriguingly, Richard Driehaus’s Driehaus Capital dropped the largest stake of the 750 funds watched by Insider Monkey, totaling close to $38.6 million in stock. Frank Fu’s fund, CaaS Capital, also dropped its stock, about $28.4 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 3 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks similar to Star Bulk Carriers Corp. (NASDAQ:SBLK). We will take a look at Jackson Financial Inc. (NYSE:JXN), Mednax Inc. (NYSE:MD), Wolverine World Wide, Inc. (NYSE:WWW), National Health Investors Inc (NYSE:NHI), FuelCell Energy, Inc. (NASDAQ:FCEL), The Cheesecake Factory Incorporated (NASDAQ:CAKE), and Sterling Check Corp. (NASDAQ:STER). This group of stocks’ market caps are similar to SBLK’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.3 hedge funds with bullish positions and the average amount invested in these stocks was $156 million. That figure was $846 million in SBLK’s case. Mednax Inc. (NYSE:MD) is the most popular stock in this table. On the other hand National Health Investors Inc (NYSE:NHI) is the least popular one with only 15 bullish hedge fund positions. Star Bulk Carriers Corp. (NASDAQ:SBLK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SBLK is 65.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately SBLK wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SBLK were disappointed as the stock returned -0.4% since the end of September (through 12/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.