How do we determine whether Black Hills Corp (NYSE:BKH) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Black Hills Corp (NYSE:BKH) a worthy investment now? Investors who are in the know are becoming more confident. The number of long hedge fund positions inched up by three recently. Black Hills Corp (NYSE:BKH) was in 18 hedge funds’ portfolios at the end of the third quarter of 2015. There were 15 hedge funds in our database with Black Hills holdings at the end of the previous quarter. At the end of this article we will also compare Black Hills Corp (NYSE:BKH) to other stocks including Alliance Holdings GP, L.P. (NASDAQ:AHGP), Dominion Midstream Partners LP (NYSE:DM), and Masonite International Corp (NYSE:DOOR) to get a better sense of its popularity.
In the financial world there are dozens of signals stock market investors employ to size up publicly traded companies. Some of the best signals are hedge fund and insider trading activity. Hedge fund experts at Insider Monkey have shown that, historically, those who follow the best picks of the elite hedge fund managers can outperform the S&P 500 by a superb amount (see the details here).
Now, let’s view the fresh action regarding Black Hills Corp (NYSE:BKH).
What have hedge funds been doing with Black Hills Corp (NYSE:BKH)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long in this stock, an increase of 20% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the hedgies followed by Insider Monkey, Jet Capital Investors, managed by Matthew Mark, holds the biggest position in Black Hills Corp (NYSE:BKH). Jet Capital Investors has a $50.6 million position in the stock, comprising 3.2% of its 13F portfolio. The second-most bullish hedge fund manager is GAMCO Investors, managed by Mario Gabelli, which holds a $20.7 million position; 0.1% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish contain Phill Gross and Robert Atchinson’s Adage Capital Management, Israel Englander’s Millennium Management, and Jim Simons’ Renaissance Technologies.
As industry-wide interest jumped, key hedge funds were breaking ground themselves. Highbridge Capital Management, managed by Glenn Russell Dubin, assembled the biggest position in Black Hills Corp (NYSE:BKH). Highbridge Capital Management had $3.3 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $1.5 million investment in the stock during the quarter. The other funds with brand new Black Hills Corp (NYSE:BKH) positions are Michael Platt and William Reeves’ BlueCrest Capital Mgmt. and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s check out hedge fund activity in other stocks similar to Black Hills Corp (NYSE:BKH). We will take a look at Alliance Holdings GP, L.P. (NASDAQ:AHGP), Dominion Midstream Partners LP (NYSE:DM), Masonite International Corp (NYSE:DOOR), and Copa Holdings, S.A. (NYSE:CPA). All of these stocks’ market caps are similar to Black Hills Corp (NYSE:BKH)’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $188 million, more than the $129 million invested in Black Hills Corp. Masonite International Corp (NYSE:DOOR) is the most popular stock in this table. On the other hand Dominion Midstream Partners LP (NYSE:DM) is the least popular one with only six bullish hedge fund positions. Black Hills Corp (NYSE:BKH) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Masonite International Corp (NYSE:DOOR) might be a better candidate to consider a long position in.