Is National Fuel Gas Company (NFG) A Good Stock To Buy?

At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31. In this article, we will use that wealth of knowledge to determine whether or not National Fuel Gas Company (NYSE:NFG) makes for a good investment right now.

Hedge fund interest in National Fuel Gas Company (NYSE:NFG) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare NFG to other stocks including Huntsman Corporation (NYSE:HUN), NIO Inc. (NYSE:NIO), and Buckeye Partners, L.P. (NYSE:BPL) to get a better sense of its popularity.

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David Harding

We’re going to check out the latest hedge fund action regarding National Fuel Gas Company (NYSE:NFG).

What does smart money think about National Fuel Gas Company (NYSE:NFG)?

Heading into the second quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards NFG over the last 15 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with NFG Positions

Among these funds, GAMCO Investors held the most valuable stake in National Fuel Gas Company (NYSE:NFG), which was worth $147.7 million at the end of the first quarter. On the second spot was Winton Capital Management which amassed $21.9 million worth of shares. Moreover, Private Capital Management, GLG Partners, and D E Shaw were also bullish on National Fuel Gas Company (NYSE:NFG), allocating a large percentage of their portfolios to this stock.

Because National Fuel Gas Company (NYSE:NFG) has experienced falling interest from the smart money, we can see that there lies a certain “tier” of fund managers that slashed their full holdings last quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest position of the 700 funds followed by Insider Monkey, valued at close to $9.5 million in stock, and Ray Dalio’s Bridgewater Associates was right behind this move, as the fund said goodbye to about $1.5 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks similar to National Fuel Gas Company (NYSE:NFG). These stocks are Huntsman Corporation (NYSE:HUN), NIO Inc. (NYSE:NIO), Buckeye Partners, L.P. (NYSE:BPL), and Alcoa Corporation (NYSE:AA). This group of stocks’ market valuations resemble NFG’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HUN 35 470004 9
NIO 21 215822 8
BPL 5 12374 0
AA 34 527362 4
Average 23.75 306391 5.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $306 million. That figure was $237 million in NFG’s case. Huntsman Corporation (NYSE:HUN) is the most popular stock in this table. On the other hand Buckeye Partners, L.P. (NYSE:BPL) is the least popular one with only 5 bullish hedge fund positions. National Fuel Gas Company (NYSE:NFG) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately NFG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NFG investors were disappointed as the stock returned -10.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

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