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Is Sentinel Energy Services Inc. (STNL) A Good Stock To Buy?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing more than 730 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 28th, 2019. What do these smart investors think about Sentinel Energy Services Inc. (NASDAQ:STNL)?

Sentinel Energy Services Inc. (NASDAQ:STNL) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 15 hedge funds’ portfolios at the end of June. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Newtek Business Services, Corp.(NASDAQ:NEWT), Loop Industries, Inc. (NASDAQ:LOOP), and Global Indemnity Limited (NASDAQ:GBLI) to gather more data points. Our calculations also showed that STNL isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

STNL_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a glance at the latest hedge fund action surrounding Sentinel Energy Services Inc. (NASDAQ:STNL).

What does smart money think about Sentinel Energy Services Inc. (NASDAQ:STNL)?

At the end of the second quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards STNL over the last 16 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Paul Glazer of Glazer Capital

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Paul Glazer’s Glazer Capital has the number one position in Sentinel Energy Services Inc. (NASDAQ:STNL), worth close to $24 million, corresponding to 2.8% of its total 13F portfolio. The second most bullish fund manager is Isaac Corre of Governors Lane, with a $22.5 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions comprise Michael Platt and William Reeves’s BlueCrest Capital Mgmt., John M. Angelo and Michael L. Gordon’s Angelo Gordon & Co and Phill Gross and Robert Atchinson’s Adage Capital Management.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the second quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks similar to Sentinel Energy Services Inc. (NASDAQ:STNL). These stocks are Newtek Business Services, Corp. (NASDAQ:NEWT), Loop Industries, Inc. (NASDAQ:LOOP), Global Indemnity Limited (NASDAQ:GBLI), and Powell Industries, Inc. (NASDAQ:POWL). All of these stocks’ market caps match STNL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NEWT 5 6595 -1
LOOP 1 229 -1
GBLI 6 34765 0
POWL 11 32062 2
Average 5.75 18413 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $138 million in STNL’s case. Powell Industries, Inc. (NASDAQ:POWL) is the most popular stock in this table. On the other hand Loop Industries, Inc. (NASDAQ:LOOP) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Sentinel Energy Services Inc. (NASDAQ:STNL) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately STNL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on STNL were disappointed as the stock returned 1.3% during the third quarter 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 many of these stocks already outperformed the market in Q3.

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

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