Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. That’s why we pay special attention to hedge fund activity in these stocks.
Is Stone Energy Corporation (NYSE:SGY) a great investment today? Investors who are in the know are taking an optimistic view. The number of long hedge fund positions moved up by 2 in recent months. SGY was in 15 hedge funds’ portfolios at the end of the third quarter of 2015. There were 13 hedge funds in our database with SGY holdings at the end of the previous quarter. At the end of this article we will also compare SGY to other stocks, including Sonus Networks, Inc. (NASDAQ:SONS), Sinovac Biotech Ltd. (NASDAQ:SVA), and United Insurance Holdings Corp.(NDA) (NASDAQ:UIHC) to get a better sense of its popularity.
Follow Stone Energy Corp (NYSE:SGY)
Follow Stone Energy Corp (NYSE:SGY)
According to most shareholders, hedge funds are viewed as worthless, old financial tools of the past. While there are more than an 8000 funds with their doors open at present, We hone in on the leaders of this club, approximately 700 funds. Most estimates calculate that this group of people oversee the lion’s share of all hedge funds’ total capital, and by paying attention to their matchless picks, Insider Monkey has deciphered numerous investment strategies that have historically exceeded the market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per year for a decade in their back tests.
With all of this in mind, we’re going to analyze the new action encompassing Stone Energy Corporation (NYSE:SGY).
What have hedge funds been doing with Stone Energy Corporation (NYSE:SGY)?
At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, PAR Capital Management, managed by Paul Reeder and Edward Shapiro, holds the number one position in Stone Energy Corporation (NYSE:SGY). PAR Capital Management has a $5 million position in the stock, comprising 0.1% of its 13F portfolio. Some other professional money managers that hold long positions contain Richard Mashaal’s Rima Senvest Management, Israel Englander’s Millennium Management and Jim Simons’ Renaissance Technologies.
As aggregate interest increased, key money managers were breaking ground themselves. PAR Capital Management assembled the largest position in Stone Energy Corporation (NYSE:SGY). Glenn Russell Dubin’s Highbridge Capital Management also initiated a $0.8 million position during the quarter. The other funds with brand new SGY positions are Mike Vranos’ Ellington, Chao Ku’s Nine Chapters Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Stone Energy Corporation (NYSE:SGY) but similarly valued. We will take a look at Sonus Networks, Inc. (NASDAQ:SONS), Sinovac Biotech Ltd. (NASDAQ:SVA), United Insurance Holdings Corp.(NDA) (NASDAQ:UIHC), and MGP Ingredients Inc (NASDAQ:MGPI). This group of stocks’ market valuations are similar to SGY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SONS | 14 | 34713 | 3 |
| SVA | 7 | 23374 | 1 |
| UIHC | 11 | 22602 | 1 |
| MGPI | 6 | 9494 | -1 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $23 million, close to the $27 million figure in SGY’s case. Sonus Networks, Inc. (NASDAQ:SONS) is the most popular stock in this table with 14 long positions, while MGP Ingredients Inc (NASDAQ:MGPI) is the least popular one. Compared to these stocks Stone Energy Corporation (NYSE:SGY) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
