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. We have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider Star Group L.P. (NYSE:SGU) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Star Group L.P. (NYSE:SGU) was in 6 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 11. SGU investors should pay attention to a decrease in hedge fund interest in recent months. There were 10 hedge funds in our database with SGU positions at the end of the fourth quarter. Our calculations also showed that SGU isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s take a glance at the latest hedge fund action regarding Star Group L.P. (NYSE:SGU).
Do Hedge Funds Think SGU Is A Good Stock To Buy Now?
At the end of March, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -40% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SGU over the last 23 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Bandera Partners, managed by Gregory Bylinsky and Jefferson Gramm, holds the most valuable position in Star Group L.P. (NYSE:SGU). Bandera Partners has a $34.2 million position in the stock, comprising 13.5% of its 13F portfolio. The second largest stake is held by Renaissance Technologies, holding a $14.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism comprise Stephen J. Errico’s Locust Wood Capital Advisers, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Bandera Partners allocated the biggest weight to Star Group L.P. (NYSE:SGU), around 13.51% of its 13F portfolio. Locust Wood Capital Advisers is also relatively very bullish on the stock, setting aside 0.53 percent of its 13F equity portfolio to SGU.
Judging by the fact that Star Group L.P. (NYSE:SGU) has witnessed falling interest from hedge fund managers, it’s easy to see that there were a few fund managers that decided to sell off their entire stakes heading into Q2. At the top of the heap, Michael M. Rothenberg’s Moab Capital Partners dumped the largest position of the 750 funds monitored by Insider Monkey, valued at about $1.3 million in stock, and David Harding’s Winton Capital Management was right behind this move, as the fund dumped about $0.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds heading into Q2.
Let’s go over hedge fund activity in other stocks similar to Star Group L.P. (NYSE:SGU). These stocks are Global Indemnity Group LLC (NASDAQ:GBLI), Freeline Therapeutics Holdings plc (NASDAQ:FRLN), Verastem Inc (NASDAQ:VSTM), Genco Shipping & Trading Limited (NYSE:GNK), Metropolitan Bank Holding Corp. (NYSE:MCB), Vishay Precision Group Inc (NYSE:VPG), and Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV). This group of stocks’ market valuations are closest to SGU’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GBLI | 3 | 49773 | -3 |
| FRLN | 5 | 16505 | -1 |
| VSTM | 12 | 129712 | -3 |
| GNK | 22 | 121117 | 7 |
| MCB | 10 | 91521 | 2 |
| VPG | 15 | 87977 | 0 |
| HOFV | 6 | 12745 | -1 |
| Average | 10.4 | 72764 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.4 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $60 million in SGU’s case. Genco Shipping & Trading Limited (NYSE:GNK) is the most popular stock in this table. On the other hand Global Indemnity Group LLC (NASDAQ:GBLI) is the least popular one with only 3 bullish hedge fund positions. Star Group L.P. (NYSE:SGU) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SGU is 25.3. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately SGU wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SGU investors were disappointed as the stock returned 7.6% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Star Group L.p. (NYSE:SGU)
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Disclosure: None. This article was originally published at Insider Monkey.
