With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Torchlight Energy Resources, Inc. (NASDAQ:TRCH).
Is Torchlight Energy Resources, Inc. (NASDAQ:TRCH) ready to rally soon? Prominent investors were betting on the stock. The number of long hedge fund positions went up by 3 lately. Torchlight Energy Resources, Inc. (NASDAQ:TRCH) was in 4 hedge funds’ portfolios at the end of March. The all time high for this statistic is 1. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TRCH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Thomas Claugus of GMT Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a look at the fresh hedge fund action regarding Torchlight Energy Resources, Inc. (NASDAQ:TRCH).
Do Hedge Funds Think TRCH Is A Good Stock To Buy Now?
At first quarter’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 300% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards TRCH over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, GMT Capital, managed by Thomas E. Claugus, holds the biggest position in Torchlight Energy Resources, Inc. (NASDAQ:TRCH). GMT Capital has a $2 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds a $0.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism include Israel Englander’s Millennium Management, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners and . In terms of the portfolio weights assigned to each position GMT Capital allocated the biggest weight to Torchlight Energy Resources, Inc. (NASDAQ:TRCH), around 0.15% of its 13F portfolio. LMR Partners is also relatively very bullish on the stock, designating 0.0032 percent of its 13F equity portfolio to TRCH.
As one would reasonably expect, key money managers were leading the bulls’ herd. GMT Capital, managed by Thomas E. Claugus, established the most valuable position in Torchlight Energy Resources, Inc. (NASDAQ:TRCH). GMT Capital had $2 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.8 million position during the quarter. The only other fund with a brand new TRCH position is Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Let’s check out hedge fund activity in other stocks similar to Torchlight Energy Resources, Inc. (NASDAQ:TRCH). These stocks are eMagin Corporation (NYSE:EMAN), PCSB Financial Corporation (NASDAQ:PCSB), Tricida, Inc. (NASDAQ:TCDA), Kura Sushi USA, Inc. (NASDAQ:KRUS), Capital Bancorp, Inc. (NASDAQ:CBNK), CNFinance Holdings Limited (NYSE:CNF), and Ovid Therapeutics Inc. (NASDAQ:OVID). This group of stocks’ market caps resemble TRCH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EMAN | 9 | 5985 | 4 |
| PCSB | 8 | 19362 | 0 |
| TCDA | 20 | 105622 | 1 |
| KRUS | 5 | 22524 | -1 |
| CBNK | 3 | 6770 | 1 |
| CNF | 2 | 148 | 2 |
| OVID | 14 | 72077 | -2 |
| Average | 8.7 | 33213 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.7 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $3 million in TRCH’s case. Tricida, Inc. (NASDAQ:TCDA) is the most popular stock in this table. On the other hand CNFinance Holdings Limited (NYSE:CNF) is the least popular one with only 2 bullish hedge fund positions. Torchlight Energy Resources, Inc. (NASDAQ:TRCH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TRCH is 43.6. 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. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on TRCH as the stock returned 70.5% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
