Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Sabine Royalty Trust (NYSE:SBR).
Sabine Royalty Trust (NYSE:SBR) has experienced an increase in support from the world’s most elite money managers recently. Sabine Royalty Trust (NYSE:SBR) was in 7 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 8. There were 5 hedge funds in our database with SBR holdings at the end of June. Our calculations also showed that SBR 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).
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.
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 take a glance at the recent hedge fund action regarding Sabine Royalty Trust (NYSE:SBR).
Hedge fund activity in Sabine Royalty Trust (NYSE:SBR)
At the end of September, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 40% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards SBR over the last 21 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
The largest stake in Sabine Royalty Trust (NYSE:SBR) was held by Wildcat Capital Management, which reported holding $9.7 million worth of stock at the end of September. It was followed by Royce & Associates with a $2.4 million position. Other investors bullish on the company included Lucas Capital Management, Citadel Investment Group, and Horizon Asset Management. In terms of the portfolio weights assigned to each position Wildcat Capital Management allocated the biggest weight to Sabine Royalty Trust (NYSE:SBR), around 3.1% of its 13F portfolio. Lucas Capital Management is also relatively very bullish on the stock, earmarking 1.33 percent of its 13F equity portfolio to SBR.
Now, key money managers were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, initiated the biggest position in Sabine Royalty Trust (NYSE:SBR). Citadel Investment Group had $0.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.2 million position during the quarter.
Let’s also examine hedge fund activity in other stocks similar to Sabine Royalty Trust (NYSE:SBR). We will take a look at Lindblad Expeditions Holdings Inc (NASDAQ:LIND), IRSA Propiedades Comerciales S.A. (NASDAQ:IRCP), Viking Therapeutics, Inc. (NASDAQ:VKTX), Clarus Corporation (NASDAQ:CLAR), Orchard Therapeutics plc (NASDAQ:ORTX), Viomi Technology Co., Ltd (NASDAQ:VIOT), and KNOT Offshore Partners LP (NYSE:KNOP). This group of stocks’ market values match SBR’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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 $42 million. That figure was $14 million in SBR’s case. Lindblad Expeditions Holdings Inc (NASDAQ:LIND) is the most popular stock in this table. On the other hand KNOT Offshore Partners LP (NYSE:KNOP) is the least popular one with only 3 bullish hedge fund positions. Sabine Royalty Trust (NYSE:SBR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SBR is 48.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately SBR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SBR investors were disappointed as the stock returned 2.2% since the end of September (through 12/2) 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 in 2020.
Disclosure: None. This article was originally published at Insider Monkey.