The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity 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 September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Golar LNG Partners LP (NASDAQ:GMLP) based on those filings.
Hedge fund interest in Golar LNG Partners LP (NASDAQ:GMLP) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that GMLP 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). 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 Servicesource International Inc (NASDAQ:SREV), Lineage Cell Therapeutics, Inc. (NYSE:LCTX), and Educational Development Corporation (NASDAQ:EDUC) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Peter Rathjens of Arrowstreet 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 15 best blue chip stocks 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. Keeping this in mind we’re going to check out the recent hedge fund action regarding Golar LNG Partners LP (NASDAQ:GMLP).
What does smart money think about Golar LNG Partners LP (NASDAQ:GMLP)?
Heading into the fourth quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2020. On the other hand, there were a total of 4 hedge funds with a bullish position in GMLP a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Huber Capital Management held the most valuable stake in Golar LNG Partners LP (NASDAQ:GMLP), which was worth $7.9 million at the end of the third quarter. On the second spot was 683 Capital Partners which amassed $2 million worth of shares. Renaissance Technologies, Solas Capital Management, 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 Huber Capital Management allocated the biggest weight to Golar LNG Partners LP (NASDAQ:GMLP), around 2.9% of its 13F portfolio. Solas Capital Management is also relatively very bullish on the stock, dishing out 0.76 percent of its 13F equity portfolio to GMLP.
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 Odey Asset Management Group).
Let’s now review hedge fund activity in other stocks similar to Golar LNG Partners LP (NASDAQ:GMLP). We will take a look at Servicesource International Inc (NASDAQ:SREV), Lineage Cell Therapeutics, Inc. (NYSE:LCTX), Educational Development Corporation (NASDAQ:EDUC), Equillium, Inc. (NASDAQ:EQ), Penns Woods Bancorp, Inc. (NASDAQ:PWOD), Western Copper and Gold Corporation (NYSE:WRN), and Investar Holding Corporation (NASDAQ:ISTR). This group of stocks’ market values are closest to GMLP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SREV | 9 | 25005 | -2 |
| LCTX | 8 | 33137 | -4 |
| EDUC | 3 | 5771 | 2 |
| EQ | 5 | 11814 | 1 |
| PWOD | 1 | 3405 | 0 |
| WRN | 3 | 2356 | 1 |
| ISTR | 5 | 13211 | 1 |
| Average | 4.9 | 13528 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.9 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $13 million in GMLP’s case. Servicesource International Inc (NASDAQ:SREV) is the most popular stock in this table. On the other hand Penns Woods Bancorp, Inc. (NASDAQ:PWOD) is the least popular one with only 1 bullish hedge fund positions. Golar LNG Partners LP (NASDAQ:GMLP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GMLP is 65.8. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on GMLP as the stock returned 40.3% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
