Hedge Funds Have Never Been More Bullish On Teekay LNG Partners L.P. (TGP)

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of December. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Teekay LNG Partners L.P. (NYSE:TGP), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Teekay LNG Partners L.P. (NYSE:TGP) was in 8 hedge funds’ portfolios at the end of December. TGP investors should pay attention to an increase in activity from the world’s largest hedge funds of late. There were 5 hedge funds in our database with TGP positions at the end of the previous quarter. Our calculations also showed that tgp isn’t among the 30 most popular stocks among hedge funds.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

Steven Tananbaum - GoldenTree Asset Management

We’re going to check out the fresh hedge fund action surrounding Teekay LNG Partners L.P. (NYSE:TGP).

Hedge fund activity in Teekay LNG Partners L.P. (NYSE:TGP)

At Q4’s end, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 60% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TGP over the last 14 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with TGP Positions

Among these funds, Royce & Associates held the most valuable stake in Teekay LNG Partners L.P. (NYSE:TGP), which was worth $8.8 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $4.7 million worth of shares. Moreover, Marshall Wace LLP, Renaissance Technologies, and GoldenTree Asset Management were also bullish on Teekay LNG Partners L.P. (NYSE:TGP), allocating a large percentage of their portfolios to this stock.

Now, key money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most outsized position in Teekay LNG Partners L.P. (NYSE:TGP). Marshall Wace LLP had $2.5 million invested in the company at the end of the quarter. Gifford Combs’s Dalton Investments also made a $0.8 million investment in the stock during the quarter. The only other fund with a brand new TGP position is Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Teekay LNG Partners L.P. (NYSE:TGP) but similarly valued. We will take a look at Cheetah Mobile Inc (NYSE:CMCM), Apollo Investment Corp. (NASDAQ:AINV), Middlesex Water Company (NASDAQ:MSEX), and Boingo Wireless Inc (NASDAQ:WIFI). This group of stocks’ market caps are closest to TGP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CMCM 4 5249 -3
AINV 15 29542 7
MSEX 11 48580 2
WIFI 18 125999 1
Average 12 52343 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $20 million in TGP’s case. Boingo Wireless Inc (NASDAQ:WIFI) is the most popular stock in this table. On the other hand Cheetah Mobile Inc (NYSE:CMCM) is the least popular one with only 4 bullish hedge fund positions. Teekay LNG Partners L.P. (NYSE:TGP) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on TGP as the stock returned 38.4% and outperformed the market by an even larger margin.

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