World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Scorpio Tankers Inc. (NYSE:STNG) investors should pay attention to an increase in hedge fund sentiment lately. Our calculations also showed that STNG isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are dozens of gauges investors can use to appraise their stock investments. Some of the less known gauges are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the top money managers can outclass the broader indices by a solid margin (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s review the new hedge fund action surrounding Scorpio Tankers Inc. (NYSE:STNG).
How have hedgies been trading Scorpio Tankers Inc. (NYSE:STNG)?
Heading into the third quarter of 2019, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 28% from the first quarter of 2019. On the other hand, there were a total of 15 hedge funds with a bullish position in STNG a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Among these funds, 683 Capital Partners held the most valuable stake in Scorpio Tankers Inc. (NYSE:STNG), which was worth $32 million at the end of the second quarter. On the second spot was Rubric Capital Management which amassed $19.7 million worth of shares. Moreover, Marshall Wace LLP, Maplelane Capital, and Renaissance Technologies were also bullish on Scorpio Tankers Inc. (NYSE:STNG), allocating a large percentage of their portfolios to this stock.
Now, some big names have been driving this bullishness. Maplelane Capital, managed by Leon Shaulov, assembled the largest position in Scorpio Tankers Inc. (NYSE:STNG). Maplelane Capital had $14.8 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $8.8 million position during the quarter. The following funds were also among the new STNG investors: Israel Englander’s Millennium Management, Leon Shaulov’s Maplelane Capital, and Steve Cohen’s Point72 Asset Management.
Let’s check out hedge fund activity in other stocks similar to Scorpio Tankers Inc. (NYSE:STNG). We will take a look at Berkshire Hills Bancorp, Inc. (NYSE:BHLB), Kaiser Aluminum Corp. (NASDAQ:KALU), MSG Networks Inc (NYSE:MSGN), and Atrion Corporation (NASDAQ:ATRI). This group of stocks’ market caps are closest to STNG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BHLB | 9 | 56410 | -4 |
| KALU | 15 | 110047 | -4 |
| MSGN | 23 | 270279 | 2 |
| ATRI | 11 | 95715 | 3 |
| Average | 14.5 | 133113 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $163 million in STNG’s case. MSG Networks Inc (NYSE:MSGN) is the most popular stock in this table. On the other hand Berkshire Hills Bancorp, Inc. (NYSE:BHLB) is the least popular one with only 9 bullish hedge fund positions. Scorpio Tankers Inc. (NYSE:STNG) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately STNG wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on STNG were disappointed as the stock returned 1.2% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
