Is TRGP Stock A Buy or Sell?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 887 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Targa Resources Corp (NYSE:TRGP) based on those filings.

Is TRGP stock a buy? Investors who are in the know were selling. The number of long hedge fund bets dropped by 1 lately. Targa Resources Corp (NYSE:TRGP) was in 29 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 35. Our calculations also showed that TRGP isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 30 hedge funds in our database with TRGP positions at the end of the third quarter.

In the financial world there are a lot of signals stock market investors put to use to grade publicly traded companies. A pair of the most underrated signals are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the top money managers can trounce the broader indices by a solid margin (see the details here).

Clint Carlson of Carlson Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this biotech stock. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Now let’s view the latest hedge fund action surrounding Targa Resources Corp (NYSE:TRGP).

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

At fourth quarter’s end, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from one quarter earlier. On the other hand, there were a total of 27 hedge funds with a bullish position in TRGP a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Millennium Management held the most valuable stake in Targa Resources Corp (NYSE:TRGP), which was worth $64.4 million at the end of the fourth quarter. On the second spot was Holocene Advisors which amassed $57.4 million worth of shares. Two Sigma Advisors, D E Shaw, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Deep Basin Capital allocated the biggest weight to Targa Resources Corp (NYSE:TRGP), around 3.1% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, dishing out 2.47 percent of its 13F equity portfolio to TRGP.

Because Targa Resources Corp (NYSE:TRGP) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few hedge funds that decided to sell off their positions entirely heading into Q1. It’s worth mentioning that Lee Ainslie’s Maverick Capital said goodbye to the biggest stake of all the hedgies monitored by Insider Monkey, totaling an estimated $2.5 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners was right behind this move, as the fund sold off about $0.2 million worth. These moves are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q1.

Let’s now review hedge fund activity in other stocks similar to Targa Resources Corp (NYSE:TRGP). We will take a look at LG Display Co Ltd. (NYSE:LPL), Shift4 Payments, Inc. (NYSE:FOUR), Phillips 66 Partners LP (NYSE:PSXP), PLDT Inc. (NYSE:PHI), Haemonetics Corporation (NYSE:HAE), Healthcare Trust Of America Inc (NYSE:HTA), and Amicus Therapeutics, Inc. (NASDAQ:FOLD). This group of stocks’ market caps are closest to TRGP’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $496 million. That figure was $489 million in TRGP’s case. Shift4 Payments, Inc. (NYSE:FOUR) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 4 bullish hedge fund positions. Targa Resources Corp (NYSE:TRGP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TRGP is 65.6. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on TRGP as the stock returned 19% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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