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Hedge Funds Are Buying Panhandle Oil and Gas Inc. (PHX)

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Panhandle Oil and Gas Inc. (NYSE:PHX) based on that data.

Is Panhandle Oil and Gas Inc. (NYSE:PHX) the right investment to pursue these days? Investors who are in the know are taking a bullish view. The number of long hedge fund positions advanced by 4 lately. Our calculations also showed that PHX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to check out the key hedge fund action regarding Panhandle Oil and Gas Inc. (NYSE:PHX).

Hedge fund activity in Panhandle Oil and Gas Inc. (NYSE:PHX)

At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PHX over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Among these funds, Trigran Investments held the most valuable stake in Panhandle Oil and Gas Inc. (NYSE:PHX), which was worth $8.8 million at the end of the third quarter. On the second spot was Marshall Wace LLP which amassed $0.2 million worth of shares. Two Sigma Advisors, Winton Capital Management, and Engineers Gate Manager 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 Trigran Investments allocated the biggest weight to Panhandle Oil and Gas Inc. (NYSE:PHX), around 1.94% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, dishing out 0.1 percent of its 13F equity portfolio to PHX.

Consequently, specific money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the largest position in Panhandle Oil and Gas Inc. (NYSE:PHX). Marshall Wace LLP had $0.2 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Greg Eisner’s Engineers Gate Manager, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group.

Let’s check out hedge fund activity in other stocks similar to Panhandle Oil and Gas Inc. (NYSE:PHX). These stocks are Natural Gas Services Group, Inc. (NYSE:NGS), VBI Vaccines, Inc. (NASDAQ:VBIV), Cortland Bancorp (NASDAQ:CLDB), and MSB Financial Corp. (NASDAQ:MSBF). This group of stocks’ market caps match PHX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NGS 10 6660 1
VBIV 4 44079 -3
CLDB 3 5586 0
MSBF 6 13953 -1
Average 5.75 17570 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $10 million in PHX’s case. Natural Gas Services Group, Inc. (NYSE:NGS) is the most popular stock in this table. On the other hand Cortland Bancorp (NASDAQ:CLDB) is the least popular one with only 3 bullish hedge fund positions. Panhandle Oil and Gas Inc. (NYSE:PHX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but beat the market by 14.8 percentage points. Unfortunately PHX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PHX were disappointed as the stock returned -12.5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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Disclosure: None. This article was originally published at Insider Monkey.