Is Spark Energy Inc (SPKE) A Good Stock To Buy?

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

Let’s go over hedge fund activity in other stocks similar to Spark Energy Inc (NASDAQ:SPKE). These stocks are Donegal Group Inc (NASDAQ:DGICA), Casella Waste Systems Inc. (NASDAQ:CWST), Independence Realty Trust Inc (NYSEMKT:IRT), and Stonegate Bank (NASDAQ:SGBK). This group of stocks’ market valuations resemble SPKE’s market valuation.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $12 million in SPKE’s case. Independence Realty Trust Inc (NYSEMKT:IRT) is the most popular stock in this table. On the other hand Donegal Group Inc (NASDAQ:DGICA) is the least popular one with only 3 bullish hedge fund positions. Spark Energy Inc (NASDAQ:SPKE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard IRT might be a better candidate to consider taking a long position in.

Disclosure: None