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 September. At Insider Monkey, we follow nearly 817 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 Brigham Minerals, Inc. (NYSE:MNRL), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is MNRL a good stock to buy now? Brigham Minerals, Inc. (NYSE:MNRL) was in 19 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 23. MNRL has experienced an increase in activity from the world’s largest hedge funds in recent months. There were 16 hedge funds in our database with MNRL positions at the end of the second quarter. Our calculations also showed that MNRL 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 66 percentage points since March 2017 (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.
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 take a peek at the new hedge fund action surrounding Brigham Minerals, Inc. (NYSE:MNRL).
Do Hedge Funds Think MNRL Is A Good Stock To Buy Now?
At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the previous quarter. On the other hand, there were a total of 14 hedge funds with a bullish position in MNRL a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Deep Basin Capital held the most valuable stake in Brigham Minerals, Inc. (NYSE:MNRL), which was worth $35 million at the end of the third quarter. On the second spot was Alyeska Investment Group which amassed $11.9 million worth of shares. Adage Capital Management, Zimmer Partners, and Castle Hook 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 Deep Basin Capital allocated the biggest weight to Brigham Minerals, Inc. (NYSE:MNRL), around 4.29% of its 13F portfolio. Omega Advisors is also relatively very bullish on the stock, dishing out 0.34 percent of its 13F equity portfolio to MNRL.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Omega Advisors, managed by Leon Cooperman, initiated the largest position in Brigham Minerals, Inc. (NYSE:MNRL). Omega Advisors had $3.5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $1.8 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Greg Eisner’s Engineers Gate Manager, and Michael Gelband’s ExodusPoint Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Brigham Minerals, Inc. (NYSE:MNRL) but similarly valued. We will take a look at TrustCo Bank Corp NY (NASDAQ:TRST), Atreca, Inc. (NASDAQ:BCEL), Community Trust Bancorp, Inc. (NASDAQ:CTBI), ScanSource, Inc. (NASDAQ:SCSC), Anika Therapeutics, Inc. (NASDAQ:ANIK), Lakeland Bancorp, Inc. (NASDAQ:LBAI), and Origin Bancorp, Inc. (NASDAQ:OBNK). This group of stocks’ market caps are closest to MNRL’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 11.1 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $75 million in MNRL’s case. Anika Therapeutics, Inc. (NASDAQ:ANIK) is the most popular stock in this table. On the other hand Origin Bancorp, Inc. (NASDAQ:OBNK) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Brigham Minerals, Inc. (NYSE:MNRL) is more popular among hedge funds. Our overall hedge fund sentiment score for MNRL is 82.8. 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 returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on MNRL as the stock returned 24.3% since the end of September (through 12/14) 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.
Disclosure: None. This article was originally published at Insider Monkey.