Is NFG A Good Stock To Buy Now?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of National Fuel Gas Company (NYSE:NFG) based on that data.

Is NFG a good stock to buy now? Money managers were becoming less hopeful. The number of long hedge fund bets dropped by 6 in recent months. National Fuel Gas Company (NYSE:NFG) was in 16 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 26. Our calculations also showed that NFG 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). There were 22 hedge funds in our database with NFG holdings at the end of June.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are dozens of methods stock traders have at their disposal to value publicly traded companies. A duo of the less known methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the market by a superb amount (see the details here).

Gavin Saitowitz of Prelude Capital

Gavin Saitowitz of Prelude Capital

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. Now we’re going to go over the latest hedge fund action encompassing National Fuel Gas Company (NYSE:NFG).

Do Hedge Funds Think NFG Is A Good Stock To Buy Now?

At the end of September, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -27% from the second quarter of 2020. On the other hand, there were a total of 24 hedge funds with a bullish position in NFG 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, GAMCO Investors held the most valuable stake in National Fuel Gas Company (NYSE:NFG), which was worth $58.3 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $31.4 million worth of shares. Two Sigma Advisors, Renaissance Technologies, and Gotham Asset Management 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 Yaupon Capital allocated the biggest weight to National Fuel Gas Company (NYSE:NFG), around 2.28% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, dishing out 0.65 percent of its 13F equity portfolio to NFG.

Due to the fact that National Fuel Gas Company (NYSE:NFG) has faced declining sentiment from hedge fund managers, logic holds that there is a sect of money managers who were dropping their full holdings in the third quarter. At the top of the heap, Stuart J. Zimmer’s Zimmer Partners dropped the largest position of the “upper crust” of funds tracked by Insider Monkey, totaling about $53.2 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund said goodbye to about $8.6 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 6 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as National Fuel Gas Company (NYSE:NFG) but similarly valued. These stocks are Ballard Power Systems Inc. (NASDAQ:BLDP), Turning Point Therapeutics, Inc. (NASDAQ:TPTX), Equitrans Midstream Corporation (NYSE:ETRN), Amicus Therapeutics, Inc. (NASDAQ:FOLD), ONE Gas Inc (NYSE:OGS), Pilgrim’s Pride Corporation (NASDAQ:PPC), and Varonis Systems Inc (NASDAQ:VRNS). This group of stocks’ market values match NFG’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BLDP 21 122657 5
TPTX 24 659001 -6
ETRN 25 432077 -4
FOLD 38 1192283 6
OGS 19 24291 -1
PPC 18 50121 3
VRNS 29 527983 1
Average 24.9 429773 0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.9 hedge funds with bullish positions and the average amount invested in these stocks was $430 million. That figure was $111 million in NFG’s case. Amicus Therapeutics, Inc. (NASDAQ:FOLD) is the most popular stock in this table. On the other hand Pilgrim’s Pride Corporation (NASDAQ:PPC) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks National Fuel Gas Company (NYSE:NFG) is even less popular than PPC. Our overall hedge fund sentiment score for NFG is 17.5. 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. Hedge funds dodged a bullet by taking a bearish stance towards NFG. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th but managed to beat the market again by 15.8 percentage points. Unfortunately NFG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); NFG investors were disappointed as the stock returned 5% since the end of the third quarter (through 12/14) 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 most of these stocks already outperformed the market so far in 2020.

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