In this article we will take a look at whether hedge funds think Teekay LNG Partners L.P. (NYSE:TGP) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is TGP a good stock to buy now? Teekay LNG Partners L.P. (NYSE:TGP) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds' portfolios at the end of September. Our calculations also showed that TGP 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). 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 Crestwood Equity Partners LP (NYSE:CEQP), Acadia Realty Trust (NYSE:AKR), and Rattler Midstream LP (NASDAQ:RTLR) to gather more data points.
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.
Chuck Royce
Chuck Royce of Royce & Associates
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. With all of this in mind we're going to take a gander at the key hedge fund action surrounding Teekay LNG Partners L.P. (NYSE:TGP).
Do Hedge Funds Think TGP Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in TGP a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Is TGP A Good Stock To Buy?
Among these funds, Ancient Art (Teton Capital) held the most valuable stake in Teekay LNG Partners L.P. (NYSE:TGP), which was worth $12.1 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $6.8 million worth of shares. Royce & Associates, Cobalt Capital Management, and Granite Point Capital 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 Cobalt Capital Management allocated the biggest weight to Teekay LNG Partners L.P. (NYSE:TGP), around 2.32% of its 13F portfolio. Ancient Art (Teton Capital) is also relatively very bullish on the stock, designating 1.66 percent of its 13F equity portfolio to TGP.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: ExodusPoint Capital. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Renaissance Technologies).
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Teekay LNG Partners L.P. (NYSE:TGP) but similarly valued. We will take a look at Crestwood Equity Partners LP (NYSE:CEQP), Acadia Realty Trust (NYSE:AKR), Rattler Midstream LP (NASDAQ:RTLR), Liberty Oilfield Services Inc. (NYSE:LBRT), Chase Corporation (NYSE:CCF), Huron Consulting Group (NASDAQ:HURN), and Fanhua Inc. (NASDAQ:FANH). This group of stocks' market caps are similar to TGP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CEQP,2,2370,-2 AKR,14,26230,-2 RTLR,7,54320,0 LBRT,7,8097,1 CCF,11,82044,-1 HURN,12,30791,1 FANH,5,5514,1 Average,8.3,29909,-0.3 [/table]
As you can see these stocks had an average of 8.3 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $33 million in TGP's case. Acadia Realty Trust (NYSE:AKR) is the most popular stock in this table. On the other hand Crestwood Equity Partners LP (NYSE:CEQP) is the least popular one with only 2 bullish hedge fund positions. Teekay LNG Partners L.P. (NYSE:TGP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TGP is 61.4. 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. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on TGP as the stock returned 20.7% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
