Spark Energy, Inc. (SPKE): Hedge Funds In Wait-and-See Mode

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 Spark Energy, Inc. (NASDAQ:SPKE), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Spark Energy, Inc. (NASDAQ:SPKE) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of March. Our calculations also showed that SPKE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Tufin Software Technologies Ltd. (NYSE:TUFN), Regional Management Corp (NYSE:RM), and Landos Biopharma, Inc. (NASDAQ:LABP) to gather more data points.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Phillip Gross of Adage 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. With all of this in mind we’re going to go over the new hedge fund action surrounding Spark Energy, Inc. (NASDAQ:SPKE).

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

At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SPKE over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the largest position in Spark Energy, Inc. (NASDAQ:SPKE). Renaissance Technologies has a $11.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $0.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism encompass D. E. Shaw’s D E Shaw, Phill Gross and Robert Atchinson’s Adage Capital Management and . In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Spark Energy, Inc. (NASDAQ:SPKE), around 0.01% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, earmarking 0.0003 percent of its 13F equity portfolio to SPKE.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. 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 D E Shaw).

Let’s check out hedge fund activity in other stocks similar to Spark Energy, Inc. (NASDAQ:SPKE). We will take a look at Tufin Software Technologies Ltd. (NYSE:TUFN), Regional Management Corp (NYSE:RM), Landos Biopharma, Inc. (NASDAQ:LABP), Haynes International, Inc. (NASDAQ:HAYN), Cytosorbents Corp (NASDAQ:CTSO), Acutus Medical, Inc. (NASDAQ:AFIB), and Soliton, Inc. (NASDAQ:SOLY). All of these stocks’ market caps are closest to SPKE’s market cap.

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 $79 million. That figure was $12 million in SPKE’s case. Landos Biopharma, Inc. (NASDAQ:LABP) is the most popular stock in this table. On the other hand Soliton, Inc. (NASDAQ:SOLY) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Spark Energy, Inc. (NASDAQ:SPKE) is even less popular than SOLY. Our overall hedge fund sentiment score for SPKE is 15. 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. Hedge funds clearly dropped the ball on SPKE as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 SPKE as the stock returned 10.5% since Q1 (through June 11th) and outperformed the market by an even larger margin.

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