A market correction in the fourth quarter, spurred by a number of global macroeconomic concerns and rising interest rates ended up having a negative impact on the markets and many hedge funds as a result. The stocks of smaller companies were especially hard hit during this time as investors fled to investments seen as being safer. This is evident in the fact that the Russell 2000 ETF underperformed the S&P 500 ETF by nearly 7 percentage points during the fourth quarter. We also received indications that hedge funds were trimming their positions amid the market volatility and uncertainty, and given their greater inclination towards smaller cap stocks than other investors, it follows that a stronger sell-off occurred in those stocks. Let’s study the hedge fund sentiment to see how those concerns affected their ownership of NextDecade Corporation (NASDAQ:NEXT) during the quarter.
NextDecade Corporation (NASDAQ:NEXT) was in 8 hedge funds’ portfolios at the end of December. NEXT investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. There were 6 hedge funds in our database with NEXT holdings at the end of the previous quarter. Our calculations also showed that next isn’t among the 30 most popular stocks among hedge funds.
According to most stock holders, hedge funds are viewed as slow, outdated financial tools of the past. While there are more than 8000 funds with their doors open today, Our researchers hone in on the leaders of this club, approximately 750 funds. It is estimated that this group of investors command the majority of all hedge funds’ total capital, and by keeping an eye on their inimitable picks, Insider Monkey has brought to light various investment strategies that have historically surpassed the market. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by nearly 5 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
We’re going to take a glance at the new hedge fund action regarding NextDecade Corporation (NASDAQ:NEXT).
How are hedge funds trading NextDecade Corporation (NASDAQ:NEXT)?
Heading into the first quarter of 2019, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NEXT over the last 14 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Among these funds, York Capital Management held the most valuable stake in NextDecade Corporation (NASDAQ:NEXT), which was worth $274.9 million at the end of the fourth quarter. On the second spot was Valinor Management LLC which amassed $105.6 million worth of shares. Moreover, Halcyon Asset Management, Highland Capital Management, and Perella Weinberg Partners were also bullish on NextDecade Corporation (NASDAQ:NEXT), allocating a large percentage of their portfolios to this stock.
Now, key money managers have been driving this bullishness. Luminus Management, managed by Jonathan Barrett and Paul Segal, created the most valuable position in NextDecade Corporation (NASDAQ:NEXT). Luminus Management had $0.4 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $0.1 million investment in the stock during the quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as NextDecade Corporation (NASDAQ:NEXT) but similarly valued. We will take a look at Argan, Inc. (NYSE:AGX), Peoples Bancorp Inc. (NASDAQ:PEBO), Sonic Automotive Inc (NYSE:SAH), and Upland Software Inc (NASDAQ:UPLD). This group of stocks’ market values are closest to NEXT’s market value.
|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 14 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $452 million in NEXT’s case. Upland Software Inc (NASDAQ:UPLD) is the most popular stock in this table. On the other hand Peoples Bancorp Inc. (NASDAQ:PEBO) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks NextDecade Corporation (NASDAQ:NEXT) is even less popular than PEBO. Hedge funds dodged a bullet by taking a bearish stance towards NEXT. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately NEXT wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); NEXT investors were disappointed as the stock returned -4.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.