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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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about Crestwood Equity Partners LP (NYSE:CEQP)?
Is Crestwood Equity Partners LP (NYSE:CEQP) a sound investment today? The smart money is taking a pessimistic view. The number of bullish hedge fund positions were cut by 2 recently. Our calculations also showed that CEQP isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). CEQP was in 4 hedge funds' portfolios at the end of March. There were 6 hedge funds in our database with CEQP holdings at the end of the previous quarter.
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 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 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.
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James Dondero of Highland Capital Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a look at the new hedge fund action regarding Crestwood Equity Partners LP (NYSE:CEQP).
How have hedgies been trading Crestwood Equity Partners LP (NYSE:CEQP)?
Heading into the second quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the fourth quarter of 2019. On the other hand, there were a total of 4 hedge funds with a bullish position in CEQP a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital has the number one position in Crestwood Equity Partners LP (NYSE:CEQP), worth close to $0.9 million, amounting to less than 0.1%% of its total 13F portfolio. Coming in second is James Dondero of Highland Capital Management, with a $0.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions encompass Ken Griffin's Citadel Investment Group, and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Highland Capital Management allocated the biggest weight to Crestwood Equity Partners LP (NYSE:CEQP), around 0.05% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, dishing out 0.0025 percent of its 13F equity portfolio to CEQP.
Because Crestwood Equity Partners LP (NYSE:CEQP) has faced bearish sentiment from the smart money, logic holds that there is a sect of hedgies that elected to cut their positions entirely by the end of the third quarter. At the top of the heap, Mark Coe's Intrinsic Edge Capital sold off the largest investment of the 750 funds monitored by Insider Monkey, worth about $8.7 million in stock, and Renaissance Technologies was right behind this move, as the fund dropped about $0.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks similar to Crestwood Equity Partners LP (NYSE:CEQP). We will take a look at XBiotech Inc. (NASDAQ:XBIT), BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX), Daily Journal Corporation (NASDAQ:DJCO), and DURECT Corporation (NASDAQ:DRRX). All of these stocks' market caps are similar to CEQP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position XBIT,8,3547,2 BCRX,25,113877,3 DJCO,2,466,-2 DRRX,9,48947,2 Average,11,41709,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $1 million in CEQP's case. BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) is the most popular stock in this table. On the other hand Daily Journal Corporation (NASDAQ:DJCO) is the least popular one with only 2 bullish hedge fund positions. Crestwood Equity Partners LP (NYSE:CEQP) is not the least popular stock in this group but hedge fund interest is still below average. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on CEQP as the stock returned 254.2% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.