The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Diamondback Energy Inc (NASDAQ:FANG) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Diamondback Energy Inc (NASDAQ:FANG) undervalued? Prominent investors were getting less bullish. The number of bullish hedge fund positions fell by 2 lately. Diamondback Energy Inc (NASDAQ:FANG) was in 29 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 47. Our calculations also showed that FANG isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 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.
Lee Ainslie of Maverick Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. With all of this in mind let’s take a look at the key hedge fund action regarding Diamondback Energy Inc (NASDAQ:FANG).
How have hedgies been trading Diamondback Energy Inc (NASDAQ:FANG)?
At the end of June, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FANG over the last 20 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Among these funds, Adage Capital Management held the most valuable stake in Diamondback Energy Inc (NASDAQ:FANG), which was worth $17.9 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $13.3 million worth of shares. Maple Rock Capital, Carlson Capital, and Renaissance Technologies 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 Birch Run Capital allocated the biggest weight to Diamondback Energy Inc (NASDAQ:FANG), around 4.28% of its 13F portfolio. Maple Rock Capital is also relatively very bullish on the stock, earmarking 2.56 percent of its 13F equity portfolio to FANG.
Since Diamondback Energy Inc (NASDAQ:FANG) has faced falling interest from the aggregate hedge fund industry, we can see that there is a sect of funds that decided to sell off their entire stakes by the end of the second quarter. Intriguingly, Keith Meister’s Corvex Capital said goodbye to the biggest position of the “upper crust” of funds tracked by Insider Monkey, totaling close to $31.1 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dumped its stock, about $23.3 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds by the end of the second quarter.
Let’s also examine hedge fund activity in other stocks similar to Diamondback Energy Inc (NASDAQ:FANG). We will take a look at Carlisle Companies, Inc. (NYSE:CSL), The Boston Beer Company Inc (NYSE:SAM), Lear Corporation (NYSE:LEA), Bausch Health Companies Inc. (NYSE:BHC), Kingsoft Cloud Holdings Limited (NASDAQ:KC), Repligen Corporation (NASDAQ:RGEN), and GrubHub Inc (NYSE:GRUB). This group of stocks’ market valuations resemble FANG’s market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CSL,38,339108,15 SAM,32,804033,8 LEA,41,896134,13 BHC,35,1745572,0 KC,20,62450,20 RGEN,34,688852,13 GRUB,52,1080219,20 Average,36,802338,12.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $802 million. That figure was $105 million in FANG’s case. GrubHub Inc (NYSE:GRUB) is the most popular stock in this table. On the other hand Kingsoft Cloud Holdings Limited (NASDAQ:KC) is the least popular one with only 20 bullish hedge fund positions. Diamondback Energy Inc (NASDAQ:FANG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FANG is 35.6. 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 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 23.8% in 2020 through September 14th and surpassed the market by 17.6 percentage points. Unfortunately FANG wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); FANG investors were disappointed as the stock returned -25.1% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.
Collective launches to be the ultimate ‘back office’ platform for freelancers
The U.S. freelancing economy is booming, according to a recent Upwork report, with more than a third of the American workforce carrying out some form of freelance work in the past 12 months. This reportedly created $1.2 trillion of economic value — 22% up on the previous year.
While a number of factors may have contributed to this surge, including the COVID-19 crisis which has left many people out of work, this movement creates a lot of administrative work in terms of incorporating a new business, doing accounts, expenses, taxes, and all the rest. And this is why a new startup is launching out of stealth today backed by an impressive roster of investors to serve as an all-in-one back office for “businesses of one.”
Founded in 2018 originally as Hyke, the San Francisco-based company later changed its name to Collective and brought on Hooman Radfar as a cofounder and CEO. Radfar previously launched a website audience tracking platform called AddThis, acquired by Oracle in 2016 for a reported $175 million, and he subsequently joined startup lab and investment company Expa, which was set up by Uber cofounder Garrett Camp.
To help fund its platform through its beta stage and onto its public launch, Collective has managed to raise $8.65 million in funding from backers including General Catalyst, QED Investors, Google’s AI-focused fund Gradient Ventures, Expa, and a host of notable individual investors including Garrett Camp.
The Collective platform offers an array of tools and services through a single online dashboard, covering S Corp formation, business banking, accounting, expenses categorization, tax filing guidance and advice, and more. The platform also links in directly to third-party financial software such as Gusto and QuickBooks.
Arguably, the platform’s greatest asset is its instant access to professional tax and business advisers, with Collective serving its users with a quarterly review of their accounts and books to provide feedback on ways to adjust salary and “optimize” deductions and expenses.
Members can also access real-time messaging so they can contact their designated bookkeeper or advisor with any specific questions they have.
All of this costs $249 per month, though this is $199 for a limited period, meaning that Collective likely isn’t aimed at those doing a little sporadic freelancing work in their spare time — it’s more likely to appeal to full-time freelancers. But this fee includes company formation support, and access to QuickBooks Online, Gusto, accounting and tax filing guidance, state compliance, and general guidance as and when required.
Moreover, Collective claimed that during its beta phase it saved members an average of $16,800 in 2019, for those earning $80,000 in revenue.
Additionally, Collective said that it’s piloting a full bookkeeping service for an extra $99 – $199 per month, for those who want to completely hand-off their accounts to someone else. Those who prefer to keep their own accounts, and just need help and advice, can forego this part of the service.
“Some members prefer to do their own accounting, and just need our help to set up and advise on bookkeeping, but we are finding that many members prefer that we handle the books, as well,” Radfar told VentureBeat.
Gradient Ventures’ involvement in Collective is also curious, given that the Google-backed VC fund focuses entirely on AI startups. According to Radfar, Collective will use machine learning and AI technologies to “help inform the automation of bookkeeping and accounting.” More specifically, he indicated that Collective can automatically categorize expenses based on their type, which in turn can help “fuel” automatic tax filing. “If you have clean books, it’s much easier to automate taxes,” Radfar said.
UK upholds decision to not prosecute 15 soldiers for 1972 ‘Bloody Sunday’
DUBLIN (Reuters) – Prosecutors in the British region of Northern Ireland on Tuesday upheld a decision not to prosecute 15 soldiers for their role in the killing of 13 unarmed Catholic civil rights marchers in Londonderry by British paratroopers in 1972.
Prosecutors last year announced that there was sufficient evidence to prosecute one former British soldier, dubbed “Soldier F”, for two murders, but that there was insufficient evidence to charge 16 other soldiers. One of those 16 has since died.
A number of the bereaved families and injured victims subsequently exercised their right to request a review of decisions.
“I have concluded that the available evidence is insufficient to provide a reasonable prospect of conviction of any of the 15 soldiers,” Marianne O’Kane, Senior Assistant Director of Northern Ireland’s Public Prosecution Service, said in a statement.
The prosecution of Soldier F is ongoing but has not yet reached trial.
In one of the most notorious incidents of the Northern Ireland conflict, soldiers from the Parachute Regiment opened fire on Sunday, Jan. 30, 1972, during an unauthorised march in a nationalist area of Londonderry.
They killed 13 people and wounded 14 others, one of whom died later, in the worst single shooting incident of “The Troubles”, three decades of sectarian violence involving Irish nationalists seeking a united Ireland and pro-British forces.
The 1998 Good Friday Agreement brought a close to a conflict in which about 3,500 people were killed.
A judicial inquiry into the events of Bloody Sunday said in 2010 the victims were innocent and had posed no threat to the military.
(Reporting by Conor Humphries; Editing by Giles Elgood)
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3 Stocks Flashing Signs of Strong Insider Buying
If you really want to know which stocks the experts – and those in the know – are buying, pay attention to what they’re doing. Stock reports, company reviews, and press statements are helpful, but you’ll get significant information from watching what the insiders are up to.The insiders – the corporate officers and board members – have to disclose when they snap up shares to prevent any unfair advantages. Tracking their stock purchases can be a useful strategy because if an insider spends their own money on a stock, it could signal that they believe big gains are in store.So, investors looking for stocks that may be flying ‘under the radar,’ but with potential to climb fast, watching for insider purchases identify some sweet market plays. To make that search easier, the TipRanks Insiders’ Hot Stocks tool gets the footwork started – identifying stocks that have seen informative moves by insiders, highlighting several common strategies used by the insiders, and collecting the data all in one place.Fresh from that database, here are the details on three stocks showing ‘informative buys’ in recent days.TravelCenters of America (TA)We’ll start with a company that you probably don’t think about often, but that does provide an essential service. TravelCenters of America is the largest publicly traded owner, operator, and franchisor of full-service highway rest stops in the US. TA started out operating truck stops for rest, repair, and maintenance, and has since expanded to full-service fueling stations offering both gasoline and diesel, fast-food restaurants, convenience stores, and other rest stop amenities. Their network of rest stops is part of the infrastructure that makes long-distance motor transport, both private and commercial, possible in the USA.As can be imagined, the social lockdowns and travel restrictions during the coronavirus pandemic were not good for TA. The good news is, the worst of the pandemic hit during Q1, and the first quarter is normally TA’s slowest of the year. This year, the first quarter showed a net loss of $1.81 per share. In the second quarter, when warmer weather normally leads to increased driving, the pandemic restrictions were also – at least partially – lifted, and TA reported a sudden turnaround, with a 59 cent EPS profit. Even so, that missed the forecast by almost a dime. The outlook for Q3, normally TA’s strongest of the year, is for EPS of 73 cents.Turning to the insider trades, Adam Portnoy of the Board of Directors has the most recent informative buys. Earlier this month, he purchased over 323,000 shares, laying out more than $5.32 million for the stock. Analyst James Sullivan, of BTIG makes two observations about TravelCenters. First, he points out, “The long-haul trucking industry has an approximate 71% share of total primary tonnage in the U.S. freight industry, making it the primary mode of freight transportation.” Sullivan then adds that this opens up opportunity for TA going forward: “The increasing demands of the nation’s large trucking fleets for consolidated service providers that can provide fuel and truck service on a national basis appear likely to drive additional consolidation in the industry.”Sullivan rates TA shares a Buy, and his $34 price target suggests the stock has an impressive 82% upside potential for the coming year. (To watch Sullivan’s track record, click here)Overall, shares in TA are rated a Strong Buy from the analyst consensus, based on 5 recent reviews including 4 Buys and 1 Hold. The shares are selling for $19.24, and the $22.70 average price target implies room for 18% upside growth. (See TA stock analysis on TipRanks)Highwoods Properties (HIW)The next stock is a real estate investment trust. Highwood operates mostly in the Southeast US, but also in Pittsburgh, where it acquires, develops, leases, and manages a portfolio of suburban office and light industrial properties.Where most companies reported heavy losses during the corona crisis, HIW saw revenues in 1H20 remain stable. EPS has grown sequentially into Q1 and remained flat in Q2 at 93 cents. Both quarter beat EPS expectations.Despite the solid financial results, HIW shares have still not recovered from the market collapse of midwinter. The stock is down 27% year-to-date.Through all of this, Highwoods has maintained its dividend, as is common among REITs. The company has a 17-year history of dividend growth and reliability, and the current payment of 48 cents per common share has been stable for the past 7 quarters. At this level, it annualizes to $1.92 and gives a yield of 5.8%.Highwoods’ insider trading has come from Board member Carlos Evans, who purchased 10,000 shares for $337,000 dollars last week. His move was the first informative buy on HIW in the last 6 months.Truist analyst Michael Lewis is impressed by the quality of HIW’s portfolio. He writes, “We continue to believe that HIW’s portfolio is one of the best-positioned among traditional office REITs in light of the COVID-19 pandemic. Rent collections have been excellent and there are no large near-term lease expirations. More broadly, the portfolio should benefit from being focused in drivable, close-in Sunbelt suburbs.”In line with these comments, Lewis rates the stock a Buy. His price target, $45, indicates a 31% potential upside from current levels. (To watch Lewis’ track record, click here)Overall, HIW has a cautiously optimistic Moderate Buy consensus rating from the Street. This breaks down into 2 Buy ratings and 1 Hold. We can also see from TipRanks that the average analyst price target is $43, which implies a ~25% upside from the current share price. (See HIW stock analysis on TipRanks)VEREIT (VER)The last stock on our insider trading list is another REIT. VEREIT is major owner and manager of retail, restaurant, and commercial real estate, with a portfolio that includes over 3,800 properties worth a collective $14.7 billion. The company’s assets are 45% retail and 20% restaurants; the rest is mainly office and light industrial sites. The total leasable square footage is 88.9 million square feet.So VEREIT is a giant in the REIT sector – but size didn’t protect it from the general downturn this year. Share performance has been lackluster, and revenues have been falling off gradually since Q4 of last year. The second quarter results showed $279 million on the top line, the lowest in a year – but the quarter also saw earnings turn back upwards, reaching 17 cents per share.VER cut back on its dividend earlier this year, reducing the payment to 8 cents per share to keep it in line with earnings. That dividend has been maintained, and the next payment is set for mid-October. The current dividend yield is 4.5%, well over double the average found among S&P stocks.The big insider trade on VER comes from Board member and CEO Glenn Rufrano. He spent over $252K on a block of 40,000 shares, pushing the insider sentiment on this stock into positive territory.Covering the stock for JPMorgan, 5-star analyst Anthony Paolone sees an important strength in VER, noting that the company has been successful in collecting rents during the crisis period. “[Its] collections showed good improvement going into July, with 85% collections in 2Q and 91% in July; when considering all the abatements and deferrals, it appears that at this point about 94% of pre-COVID contractual rental revenue has been addressed, and it seems to us that a normalized run rate for this vast majority of the portfolio should take hold in early 2021; the company is making progress in working through the remaining 5-6% of non-collections,” Paolone noted.Paolone gives VER an Overweight (i.e. Buy) rating, and his $8 price target implies a 22% upside for the next 12 months. (To watch Paolone’s track record, click here)All in all, VER has drawn optimism mixed with caution when it comes to consensus opinion among sell-side analysts. Out of 5 analysts polled in the last 3 months, 3 are bullish on the stock, while 2 remain sidelined. With an 11% upside potential, the stock’s consensus target price stands at $7.25. (See VEREIT’s stock analysis at TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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