Is New Fortress Energy (NFE) A Good Stock To Buy Now?
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 at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of New Fortress Energy LLC (NASDAQ:NFE).
Is New Fortress Energy (NFE) a good stock to buy now? The best stock pickers were taking an optimistic view. The number of bullish hedge fund bets went up by 2 recently. New Fortress Energy LLC (NASDAQ:NFE) was in 7 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 5. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that NFE 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). There were 5 hedge funds in our database with NFE holdings at the end of June.
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.
Dmitry Balyasny of Balyasny Asset Management
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 check out the fresh hedge fund action surrounding New Fortress Energy LLC (NASDAQ:NFE).
Hedge fund activity in New Fortress Energy LLC (NASDAQ:NFE)
Heading into the fourth quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in NFE a year ago. With hedgies' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
The largest stake in New Fortress Energy LLC (NASDAQ:NFE) was held by Encompass Capital Advisors, which reported holding $8.8 million worth of stock at the end of September. It was followed by Millennium Management with a $3 million position. Other investors bullish on the company included PEAK6 Capital Management, Balyasny Asset Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Encompass Capital Advisors allocated the biggest weight to New Fortress Energy LLC (NASDAQ:NFE), around 0.78% of its 13F portfolio. Algert Global is also relatively very bullish on the stock, designating 0.19 percent of its 13F equity portfolio to NFE.
As aggregate interest increased, specific money managers were leading the bulls' herd. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most valuable position in New Fortress Energy LLC (NASDAQ:NFE). Balyasny Asset Management had $1.5 million invested in the company at the end of the quarter. Peter Algert's Algert Global also initiated a $0.6 million position during the quarter. The following funds were also among the new NFE investors: Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Bernard Lambilliotte's Ecofin Ltd.
Let's go over hedge fund activity in other stocks similar to New Fortress Energy LLC (NASDAQ:NFE). We will take a look at Exelixis, Inc. (NASDAQ:EXEL), Alteryx, Inc. (NYSE:AYX), F5 Networks, Inc. (NASDAQ:FFIV), JFrog Ltd. (NASDAQ:FROG), NRG Energy Inc (NYSE:NRG), RH (NYSE:RH), and Sibanye Stillwater Limited (NYSE:SBSW). All of these stocks' market caps resemble NFE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EXEL,34,1173099,-5 AYX,41,1192864,-7 FFIV,36,806699,-3 FROG,22,288909,22 NRG,32,1086627,-4 RH,40,1623869,0 SBSW,22,208952,5 Average,32.4,911574,1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.4 hedge funds with bullish positions and the average amount invested in these stocks was $912 million. That figure was $15 million in NFE's case. Alteryx, Inc. (NYSE:AYX) is the most popular stock in this table. On the other hand JFrog Ltd. (NASDAQ:FROG) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks New Fortress Energy LLC (NASDAQ:NFE) is even less popular than FROG. Our overall hedge fund sentiment score for NFE is 37. 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. Hedge funds dodged a bullet by taking a bearish stance towards NFE. Our calculations showed that the top 20 most popular hedge fund stocks 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 but managed to beat the market again by 16 percentage points. Unfortunately NFE wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); NFE investors were disappointed as the stock returned -2.8% since the end of the third quarter (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 so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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