In this article you are going to find out whether hedge funds think Helix Energy Solutions Group Inc. (NYSE:HLX) 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 HLX a good stock to buy now? Helix Energy Solutions Group Inc. (NYSE:HLX) shareholders have witnessed an increase in hedge fund interest lately. Helix Energy Solutions Group Inc. (NYSE:HLX) was in 14 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 22. Our calculations also showed that HLX isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let’s check out the key hedge fund action surrounding Helix Energy Solutions Group Inc. (NYSE:HLX).
Do Hedge Funds Think HLX Is A Good Stock To Buy Now?
At the end of September, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 40% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HLX over the last 21 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, SIR Capital Management held the most valuable stake in Helix Energy Solutions Group Inc. (NYSE:HLX), which was worth $4.2 million at the end of the third quarter. On the second spot was Millennium Management which amassed $3.7 million worth of shares. Citadel Investment Group, Arrowstreet Capital, and Renaissance Technologies 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 SIR Capital Management allocated the biggest weight to Helix Energy Solutions Group Inc. (NYSE:HLX), around 1.01% of its 13F portfolio. Alden Global Capital is also relatively very bullish on the stock, designating 0.14 percent of its 13F equity portfolio to HLX.
Now, specific money managers were breaking ground themselves. SIR Capital Management, managed by Vince Maddi and Shawn Brennan, created the largest position in Helix Energy Solutions Group Inc. (NYSE:HLX). SIR Capital Management had $4.2 million invested in the company at the end of the quarter. Renaissance Technologies also made a $1.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Randall Smith’s Alden Global Capital, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks similar to Helix Energy Solutions Group Inc. (NYSE:HLX). We will take a look at Tuscan Holdings Corp. (NASDAQ:THCB), Benefitfocus Inc (NASDAQ:BNFT), Alexco Resource Corp. (NYSE:AXU), AdvanSix Inc. (NYSE:ASIX), Urstadt Biddle Properties Inc (NYSE:UBA), Sutro Biopharma, Inc. (NASDAQ:STRO), and Insteel Industries Inc (NASDAQ:IIIN). All of these stocks’ market caps match HLX’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 13.7 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $16 million in HLX’s case. Sutro Biopharma, Inc. (NASDAQ:STRO) is the most popular stock in this table. On the other hand Alexco Resource Corp. (NYSE:AXU) is the least popular one with only 2 bullish hedge fund positions. Helix Energy Solutions Group Inc. (NYSE:HLX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HLX is 56.7. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on HLX as the stock returned 73.9% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.