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Tellurian Inc. (TELL): Hedge Funds Keep Selling

In this article you are going to find out whether hedge funds think Tellurian Inc. (NASDAQ:TELL) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Tellurian Inc. (NASDAQ:TELL) worth your attention right now? Hedge funds are getting less bullish. The number of bullish hedge fund positions retreated by 5 in recent months. Our calculations also showed that TELL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). TELL was in 6 hedge funds’ portfolios at the end of the first quarter of 2020. There were 11 hedge funds in our database with TELL holdings at the end of the previous quarter.

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

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s go over the new hedge fund action encompassing Tellurian Inc. (NASDAQ:TELL).

How are hedge funds trading Tellurian Inc. (NASDAQ:TELL)?

Heading into the second quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -45% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in TELL over the last 18 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.

Is TELL A Good Stock To Buy?

More specifically, Citadel Investment Group was the largest shareholder of Tellurian Inc. (NASDAQ:TELL), with a stake worth $1 million reported as of the end of September. Trailing Citadel Investment Group was Yaupon Capital, which amassed a stake valued at $0.4 million. Citadel Investment Group, Intrinsic Edge Capital, and Engineers Gate Manager 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 Tellurian Inc. (NASDAQ:TELL), around 0.64% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, dishing out 0.0025 percent of its 13F equity portfolio to TELL.

Due to the fact that Tellurian Inc. (NASDAQ:TELL) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds that elected to cut their positions entirely last quarter. It’s worth mentioning that Jos Shaver’s Electron Capital Partners sold off the biggest investment of the 750 funds monitored by Insider Monkey, totaling close to $23.2 million in stock. Ryan Tolkin (CIO)’s fund, Schonfeld Strategic Advisors, also sold off its stock, about $7.3 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 5 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Tellurian Inc. (NASDAQ:TELL) but similarly valued. These stocks are SC Health Corporation (NYSE:SCPE), Jumia Technologies AG (NYSE:JMIA), Atlantic Power Corp (NYSE:AT), and IRSA Propiedades Comerciales S.A. (NASDAQ:IRCP). All of these stocks’ market caps match TELL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SCPE 16 57393 -1
JMIA 6 7689 0
AT 10 22041 -2
IRCP 4 7670 0
Average 9 23698 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $2 million in TELL’s case. SC Health Corporation (NYSE:SCPE) is the most popular stock in this table. On the other hand IRSA Propiedades Comerciales S.A. (NASDAQ:IRCP) is the least popular one with only 4 bullish hedge fund positions. Tellurian Inc. (NASDAQ:TELL) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on TELL as the stock returned 73.3% during the second quarter and outperformed the market by an even larger margin.

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