National Fuel Gas Co. (NFG): Hedge Fund Ownership Rebounds In Big Way

The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards National Fuel Gas Co. (NYSE:NFG).

National Fuel Gas Co. (NYSE:NFG) has seen an increase in hedge fund sentiment recently. NFG was in 21 hedge funds’ portfolios at the end of September. There were 19 hedge funds in our database with NFG holdings at the end of the previous quarter. 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 Dolby Laboratories, Inc. (NYSE:DLB), Allison Transmission Holdings Inc (NYSE:ALSN), and Grupo Aeroportuario del Sureste (ADR) (NYSE:ASR) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How are hedge funds trading National Fuel Gas Co. (NYSE:NFG)?

At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, an 11% boost from the previous quarter. After hedge fund ownership bottomed out on March 31, it has quickly rebounded to approach its yearly high, gaining over 100% in the past 2 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, GAMCO Investors, managed by Mario Gabelli, holds the number one position in National Fuel Gas Co. (NYSE:NFG). GAMCO Investors has a $172.9 million position in the stock, comprising 1.1% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, led by Jim Simons, holding a $27 million position. Remaining professional money managers that are bullish consist of Gregg J. Powers’ Private Capital Management, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group.

As one would reasonably expect, specific money managers were leading the bulls’ herd. Citadel Investment Group assembled the most valuable call position in National Fuel Gas Co. (NYSE:NFG). Citadel Investment Group had $0.5 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $0.5 million position during the quarter. The other funds with brand new NFG positions are Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, Mike Vranos’ Ellington, and Joshua Packwood and Schuster Tanger’s Radix Partners.

Let’s check out hedge fund activity in other stocks similar to National Fuel Gas Co. (NYSE:NFG). These stocks are Dolby Laboratories, Inc. (NYSE:DLB), Allison Transmission Holdings Inc (NYSE:ALSN), Grupo Aeroportuario del Sureste (ADR) (NYSE:ASR), and PacWest Bancorp (NASDAQ:PACW). This group of stocks’ market valuations are closest to NFG’s market valuation.

As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $633 million. That figure was $257 million in NFG’s case. Allison Transmission Holdings Inc (NYSE:ALSN) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Sureste (ADR) (NYSE:ASR) is the least popular one with only 9 bullish hedge fund positions. National Fuel Gas Co. (NYSE:NFG) 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 ALSN might be a better candidate to consider a long position in.

Disclosure: None