Hedge Funds Never Been Less Bullish On Contura Energy, Inc. (CTRA)

In this article you are going to find out whether hedge funds think Contura Energy, Inc. (NYSE:CTRA) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Contura Energy, Inc. (NYSE:CTRA) a buy, sell, or hold? The smart money is getting less optimistic. The number of bullish hedge fund positions were cut by 3 in recent months. Our calculations also showed that CTRA 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.

In the eyes of most traders, hedge funds are assumed to be worthless, old investment vehicles of yesteryear. While there are greater than 8000 funds trading at the moment, Our experts hone in on the bigwigs of this club, about 850 funds. These money managers oversee most of all hedge funds’ total asset base, and by watching their unrivaled stock picks, Insider Monkey has unearthed several investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Andy Redleaf Andrew Redleaf Whitebox Advisors

Andy Redleaf of Whitebox Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 PayPal alternatives for international payments to identify emerging companies that are likely to deliver 1000% gains in the coming years. 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. With all of this in mind we’re going to take a gander at the recent hedge fund action encompassing Contura Energy, Inc. (NYSE:CTRA).

Hedge fund activity in Contura Energy, Inc. (NYSE:CTRA)

At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from the fourth quarter of 2019. On the other hand, there were a total of 32 hedge funds with a bullish position in CTRA a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Among these funds, Highbridge Capital Management held the most valuable stake in Contura Energy, Inc. (NYSE:CTRA), which was worth $3.4 million at the end of the third quarter. On the second spot was Whitebox Advisors which amassed $2.8 million worth of shares. Alta Fundamental Advisers, Tontine Asset Management, and Mangrove Partners 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 Alta Fundamental Advisers allocated the biggest weight to Contura Energy, Inc. (NYSE:CTRA), around 3.03% of its 13F portfolio. Tontine Asset Management is also relatively very bullish on the stock, designating 0.62 percent of its 13F equity portfolio to CTRA.

Seeing as Contura Energy, Inc. (NYSE:CTRA) has witnessed falling interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of funds who sold off their entire stakes last quarter. At the top of the heap, Christopher Pucillo’s Solus Alternative Asset Management cut the largest investment of all the hedgies followed by Insider Monkey, comprising an estimated $4.3 million in stock. Israel Englander’s fund, Millennium Management, also sold off its stock, about $1.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Contura Energy, Inc. (NYSE:CTRA). We will take a look at Baudax Bio, Inc. (NASDAQ:BXRX), Mediwound Ltd (NASDAQ:MDWD), NanoViricides Inc (NYSE:NNVC), and Sensus Healthcare, Inc. (NASDAQ:SRTS). This group of stocks’ market caps are closest to CTRA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BXRX 11 10267 1
MDWD 1 730 -1
NNVC 2 409 1
SRTS 1 353 0
Average 3.75 2940 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.75 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $15 million in CTRA’s case. Baudax Bio, Inc. (NASDAQ:BXRX) is the most popular stock in this table. On the other hand Mediwound Ltd (NASDAQ:MDWD) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Contura Energy, Inc. (NYSE:CTRA) is more popular among hedge funds. 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 returned 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on CTRA as the stock returned 28.9% so far in Q2 (through June 25th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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