Hedge funds don’t get the respect they used to get. Nowadays investors prefer passive funds over actively managed funds. One thing they don’t realize is that 100% of the passive funds didn’t see the coronavirus recession coming, but a lot of hedge funds did. Even we published an article near the end of February and predicted a US recession. Think about all the losses you could have avoided if you sold your shares in February and bought them back at the end of March.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Helix Energy Solutions Group Inc. (NYSE:HLX)? The smart money sentiment can provide an answer to this question.
Helix Energy Solutions Group Inc. (NYSE:HLX) investors should be aware of an increase in support from the world’s most elite money managers recently. Our calculations also showed that HLX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Paul Marshall of Marshall Wace
We leave no stone unturned when looking for the next great investment idea. For example, this investor can predict short term winners following earnings announcements with 77% accuracy, so we check out his stock picks. A former hedge fund manager is pitching the “next Amazon” in this video; again we are listening. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the recent hedge fund action encompassing Helix Energy Solutions Group Inc. (NYSE:HLX).
How are hedge funds trading Helix Energy Solutions Group Inc. (NYSE:HLX)?
At the end of the fourth quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 43% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards HLX over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
The largest stake in Helix Energy Solutions Group Inc. (NYSE:HLX) was held by Citadel Investment Group, which reported holding $13.4 million worth of stock at the end of September. It was followed by Balyasny Asset Management with a $9.4 million position. Other investors bullish on the company included Renaissance Technologies, Marshall Wace LLP, and Millennium Management. In terms of the portfolio weights assigned to each position Algert Coldiron Investors allocated the biggest weight to Helix Energy Solutions Group Inc. (NYSE:HLX), around 0.19% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, earmarking 0.09 percent of its 13F equity portfolio to HLX.
Now, some big names have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in Helix Energy Solutions Group Inc. (NYSE:HLX). Marshall Wace LLP had $2.9 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $2 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, and Benjamin A. Smith’s Laurion Capital Management.
Let’s check out hedge fund activity in other stocks similar to Helix Energy Solutions Group Inc. (NYSE:HLX). These stocks are iRobot Corporation (NASDAQ:IRBT), The RMR Group Inc. (NASDAQ:RMR), Stamps.com Inc. (NASDAQ:STMP), and Innoviva, Inc. (NASDAQ:INVA). This group of stocks’ market values match HLX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IRBT | 13 | 50479 | 1 |
| RMR | 21 | 122251 | -1 |
| STMP | 20 | 347431 | 3 |
| INVA | 19 | 303137 | -6 |
| Average | 18.25 | 205825 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $206 million. That figure was $46 million in HLX’s case. The RMR Group Inc. (NASDAQ:RMR) is the most popular stock in this table. On the other hand iRobot Corporation (NASDAQ:IRBT) is the least popular one with only 13 bullish hedge fund positions. Helix Energy Solutions Group Inc. (NYSE:HLX) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but beat the market by 12.9 percentage points. Unfortunately HLX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on HLX were disappointed as the stock returned -77.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
