In this article we will analyze whether Scorpio Tankers Inc. (NYSE:STNG) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Scorpio Tankers Inc. (NYSE:STNG) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 20 hedge funds’ portfolios at the end of June. Our calculations also showed that STNG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). 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 Gulfport Energy Corporation (NYSE:GPOR), Ideanomics, Inc. (NASDAQ:IDEX), and Talos Energy, Inc. (NYSE:TALO) to gather more data points.
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 S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the-radar stock. We go through lists like the 10 best growth stocks to buy to pick the next Tesla that will deliver a 10x return. 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. Now we’re going to review the latest hedge fund action regarding Scorpio Tankers Inc. (NYSE:STNG).
Do Hedge Funds Think STNG Is A Good Stock To Buy Now?
At Q2’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in STNG a year ago. So, let’s see 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, Jeremy Hosking’s Hosking Partners has the biggest position in Scorpio Tankers Inc. (NYSE:STNG), worth close to $17.7 million, amounting to 0.4% of its total 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $15.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that are bullish consist of George McCabe’s Portolan Capital Management, Michael Burry’s Scion Asset Management and Steve Cohen’s Point72 Asset Management. In terms of the portfolio weights assigned to each position Alden Global Capital allocated the biggest weight to Scorpio Tankers Inc. (NYSE:STNG), around 8.43% of its 13F portfolio. Amitell Capital is also relatively very bullish on the stock, setting aside 1.98 percent of its 13F equity portfolio to STNG.
Seeing as Scorpio Tankers Inc. (NYSE:STNG) has experienced falling interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of hedgies that decided to sell off their full holdings by the end of the second quarter. It’s worth mentioning that Paul Tudor Jones’s Tudor Investment Corp dropped the biggest investment of the 750 funds tracked by Insider Monkey, valued at close to $0.4 million in stock. Parvinder Thiara’s fund, Athanor Capital, also sold off its stock, about $0.2 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Scorpio Tankers Inc. (NYSE:STNG). These stocks are Gulfport Energy Corporation (NYSE:GPOR), Ideanomics, Inc. (NASDAQ:IDEX), Talos Energy, Inc. (NYSE:TALO), Zealand Pharma A/S (NASDAQ:ZEAL), IMAX Corporation (NYSE:IMAX), Golden Entertainment Inc (NASDAQ:GDEN), and Studio City International Holdings Limited (NYSE:MSC). This group of stocks’ market caps resemble STNG’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.9 hedge funds with bullish positions and the average amount invested in these stocks was $207 million. That figure was $116 million in STNG’s case. IMAX Corporation (NYSE:IMAX) is the most popular stock in this table. On the other hand Zealand Pharma A/S (NASDAQ:ZEAL) is the least popular one with only 1 bullish hedge fund positions. Scorpio Tankers Inc. (NYSE:STNG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for STNG is 64.5. 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. 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 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately STNG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on STNG were disappointed as the stock returned -21.2% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Scorpio Tankers Inc (NYSE:STNG)
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Disclosure: None. This article was originally published at Insider Monkey.