Is Cheniere Energy Partners LP (CQP) A Good Stock To Buy?
The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Cheniere Energy Partners LP (NYSE:CQP).
Is Cheniere Energy Partners LP (NYSE:CQP) a superb investment today? The best stock pickers are getting less bullish. The number of long hedge fund bets were cut by 2 in recent months. Our calculations also showed that CQP isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.
[caption id="attachment_746830" align="aligncenter" width="473"]
Matthew Hulsizer of PEAK6 Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Now we're going to analyze the key hedge fund action regarding Cheniere Energy Partners LP (NYSE:CQP).
Hedge fund activity in Cheniere Energy Partners LP (NYSE:CQP)
At Q3's end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CQP over the last 17 quarters. With the smart money's positions undergoing their usual ebb and flow, 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 Cheniere Energy Partners LP (NYSE:CQP) was held by Columbus Hill Capital Management, which reported holding $6.9 million worth of stock at the end of September. It was followed by BP Capital with a $1.4 million position. Other investors bullish on the company included Southport Management, Citadel Investment Group, and PEAK6 Capital Management. In terms of the portfolio weights assigned to each position Southport Management allocated the biggest weight to Cheniere Energy Partners LP (NYSE:CQP), around 7.67% of its 13F portfolio. BP Capital is also relatively very bullish on the stock, setting aside 1.13 percent of its 13F equity portfolio to CQP.
Judging by the fact that Cheniere Energy Partners LP (NYSE:CQP) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there were a few hedge funds that decided to sell off their entire stakes heading into Q4. It's worth mentioning that Matthew Hulsizer's PEAK6 Capital Management sold off the largest position of the "upper crust" of funds monitored by Insider Monkey, totaling close to $1.7 million in stock. Renaissance Technologies, also dumped its stock, about $0.2 million worth. These moves are important to note, as total hedge fund interest was cut by 2 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Cheniere Energy Partners LP (NYSE:CQP) but similarly valued. We will take a look at Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), Kellogg Company (NYSE:K), The Hartford Financial Services Group, Inc. (NYSE:HIG), and Stanley Black & Decker, Inc. (NYSE:SWK). This group of stocks' market caps match CQP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALXN,46,2582286,2 K,27,629331,-1 HIG,32,848897,2 SWK,26,1040404,-1 Average,32.75,1275230,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.75 hedge funds with bullish positions and the average amount invested in these stocks was $1275 million. That figure was $11 million in CQP's case. Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is the most popular stock in this table. On the other hand Stanley Black & Decker, Inc. (NYSE:SWK) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Cheniere Energy Partners LP (NYSE:CQP) is even less popular than SWK. Hedge funds dodged a bullet by taking a bearish stance towards CQP. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CQP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CQP investors were disappointed as the stock returned -13.3% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
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