Hedge Funds Are Dumping Golar LNG Limited (GLNG)

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Golar LNG Limited (NASDAQ:GLNG).

Golar LNG Limited (NASDAQ:GLNG) was in 20 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 39. GLNG investors should pay attention to a decrease in support from the world’s most elite money managers of late. There were 31 hedge funds in our database with GLNG positions at the end of the fourth quarter. Our calculations also showed that GLNG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

William Gray Orbis Investment Management

William Gray of Orbis Investment Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. With all of this in mind we’re going to go over the recent hedge fund action encompassing Golar LNG Limited (NASDAQ:GLNG).

Do Hedge Funds Think GLNG Is A Good Stock To Buy Now?

At first quarter’s end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -35% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GLNG over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Orbis Investment Management, managed by William B. Gray, holds the number one position in Golar LNG Limited (NASDAQ:GLNG). Orbis Investment Management has a $122.9 million position in the stock, comprising 0.9% of its 13F portfolio. Coming in second is Newtyn Management, led by Noah Levy and Eugene Dozortsev, holding a $24.9 million position; the fund has 6.7% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions comprise Israel Englander’s Millennium Management, Joe Huber’s Huber Capital Management and Christian Leone’s Luxor Capital Group. In terms of the portfolio weights assigned to each position Solas Capital Management allocated the biggest weight to Golar LNG Limited (NASDAQ:GLNG), around 8.6% of its 13F portfolio. Newtyn Management is also relatively very bullish on the stock, dishing out 6.71 percent of its 13F equity portfolio to GLNG.

Seeing as Golar LNG Limited (NASDAQ:GLNG) has witnessed declining sentiment from hedge fund managers, it’s easy to see that there was a specific group of hedge funds that decided to sell off their full holdings last quarter. At the top of the heap, Christian Leone’s Luxor Capital Group cut the biggest investment of all the hedgies followed by Insider Monkey, valued at close to $38 million in stock, and Carl Goldsmith and Scott Klein’s Beach Point Capital Management was right behind this move, as the fund dropped about $20.6 million worth. These moves are interesting, as total hedge fund interest dropped by 11 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Golar LNG Limited (NASDAQ:GLNG). We will take a look at Benchmark Electronics, Inc. (NYSE:BHE), Forestar Group Inc. (NYSE:FOR), Constellation Pharmaceuticals, Inc. (NASDAQ:CNST), Monarch Casino & Resort, Inc. (NASDAQ:MCRI), ESSA Pharma Inc. (NASDAQ:EPIX), Mersana Therapeutics, Inc. (NASDAQ:MRSN), and Enerplus Corp (NYSE:ERF). This group of stocks’ market caps match GLNG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BHE 11 38054 0
FOR 14 145832 3
CNST 26 324808 -9
MCRI 13 97368 -1
EPIX 28 400204 10
MRSN 25 357646 -5
ERF 19 145392 2
Average 19.4 215615 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $216 million. That figure was $265 million in GLNG’s case. ESSA Pharma Inc. (NASDAQ:EPIX) is the most popular stock in this table. On the other hand Benchmark Electronics, Inc. (NYSE:BHE) is the least popular one with only 11 bullish hedge fund positions. Golar LNG Limited (NASDAQ:GLNG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GLNG is 35.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on GLNG, though not to the same extent, as the stock returned 12% since Q1 (through July 16th) and outperformed the market as well.

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