Is Contango Oil & Gas Company (NYSE:MCF) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Hedge fund interest in Contango Oil & Gas Company (NYSE:MCF) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that MCF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare MCF to other stocks including Nabors Industries Ltd. (NYSE:NBR), Mustang Bio, Inc. (NASDAQ:MBIO), and LSI Industries, Inc. (NASDAQ:LYTS) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Today there are a multitude of indicators market participants use to value stocks. A pair of the less known indicators are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the top money managers can outclass the S&P 500 by a very impressive amount (see the details here).
J. Carlo Cannell of Cannell Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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. With all of this in mind let’s analyze the key hedge fund action surrounding Contango Oil & Gas Company (NYSE:MCF).
What does smart money think about Contango Oil & Gas Company (NYSE:MCF)?
Heading into the fourth quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MCF over the last 21 quarters. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, J. Carlo Cannell’s Cannell Capital has the number one position in Contango Oil & Gas Company (NYSE:MCF), worth close to $2.5 million, accounting for 0.9% of its total 13F portfolio. On Cannell Capital’s heels is Cliff Asness of AQR Capital Management, with a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and . In terms of the portfolio weights assigned to each position Cannell Capital allocated the biggest weight to Contango Oil & Gas Company (NYSE:MCF), around 0.92% of its 13F portfolio. AQR Capital Management is also relatively very bullish on the stock, earmarking 0.0002 percent of its 13F equity portfolio to MCF.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: PEAK6 Capital Management. 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 AQR Capital Management).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Contango Oil & Gas Company (NYSE:MCF) but similarly valued. These stocks are Nabors Industries Ltd. (NYSE:NBR), Mustang Bio, Inc. (NASDAQ:MBIO), LSI Industries, Inc. (NASDAQ:LYTS), Gannett Co., Inc. (NYSE:GCI), LCNB Corp. (NASDAQ:LCNB), Stratus Properties Inc. (NASDAQ:STRS), and Protara Therapeutics, Inc. (NASDAQ:TARA). All of these stocks’ market caps match MCF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NBR | 12 | 13624 | -3 |
| MBIO | 13 | 17492 | 0 |
| LYTS | 9 | 23658 | 3 |
| GCI | 11 | 14522 | -1 |
| LCNB | 2 | 2996 | 0 |
| STRS | 3 | 26544 | 1 |
| TARA | 15 | 122192 | 7 |
| Average | 9.3 | 31575 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.3 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $3 million in MCF’s case. Protara Therapeutics, Inc. (NASDAQ:TARA) is the most popular stock in this table. On the other hand LCNB Corp. (NASDAQ:LCNB) is the least popular one with only 2 bullish hedge fund positions. Contango Oil & Gas Company (NYSE:MCF) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MCF is 15.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on MCF as the stock returned 22.4% since the end of the third quarter (through 11/23) and outperformed the market by an even larger margin.
Follow Contango Oil & Gas Co (NYSEMKT:MCF)
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Disclosure: None. This article was originally published at Insider Monkey.
