Do Hedge Funds Love Brooge Energy Limited (BROG)?

Asma UL Husna
·6 min read

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Brooge Energy Limited (NASDAQ:BROG) in this article.

Brooge Energy Limited (NASDAQ:BROG) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds' portfolios at the end of September. Our calculations also showed that BROG 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 GMS Inc. (NYSE:GMS), US Ecology Inc. (NASDAQ:ECOL), and AudioCodes Ltd. (NASDAQ:AUDC) to gather more data points. Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Alex Litowitz Magnetar Capital
Alex Litowitz Magnetar Capital

Alec Litowitz of Magnetar Capital

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 let's review the new hedge fund action regarding Brooge Energy Limited (NASDAQ:BROG).

What have hedge funds been doing with Brooge Energy Limited (NASDAQ:BROG)?

At the end of September, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 8 hedge funds held shares or bullish call options in BROG a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Alec Litowitz and Ross Laser's Magnetar Capital has the largest position in Brooge Energy Limited (NASDAQ:BROG), worth close to $18.1 million, amounting to 0.3% of its total 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $9.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish contain Michael Platt and William Reeves's BlueCrest Capital Mgmt., Michael Platt and William Reeves's BlueCrest Capital Mgmt. and Andrew Weiss's Weiss Asset Management. In terms of the portfolio weights assigned to each position Magnetar Capital allocated the biggest weight to Brooge Energy Limited (NASDAQ:BROG), around 0.32% of its 13F portfolio. BlueCrest Capital Mgmt. is also relatively very bullish on the stock, earmarking 0.17 percent of its 13F equity portfolio to BROG.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Brooge Energy Limited (NASDAQ:BROG) but similarly valued. These stocks are GMS Inc. (NYSE:GMS), US Ecology Inc. (NASDAQ:ECOL), AudioCodes Ltd. (NASDAQ:AUDC), Regenxbio Inc (NASDAQ:RGNX), Live Oak Bancshares Inc (NASDAQ:LOB), Universal Corp (NYSE:UVV), and Lithium Americas Corp. (NYSE:LAC). This group of stocks' market valuations are closest to BROG's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GMS,18,99280,1 ECOL,12,25411,-4 AUDC,9,25983,-3 RGNX,22,144111,-1 LOB,10,40785,0 UVV,12,74834,-1 LAC,3,3349,2 Average,12.3,59108,-0.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.3 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $36 million in BROG's case. Regenxbio Inc (NASDAQ:RGNX) is the most popular stock in this table. On the other hand Lithium Americas Corp. (NYSE:LAC) is the least popular one with only 3 bullish hedge fund positions. Brooge Energy Limited (NASDAQ:BROG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BROG is 29.3. 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 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 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately BROG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BROG investors were disappointed as the stock returned -0.8% since the end of September (through 11/27) 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.

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

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