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Do Hedge Funds Love Capital Product Partners L.P. (CPLP)?

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Debasis Saha
·6 min read
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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 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2020. What do these smart investors think about Capital Product Partners L.P. (NASDAQ:CPLP)?

Capital Product Partners L.P. (NASDAQ:CPLP) was in 4 hedge funds' portfolios at the end of September. The all time high for this statistics is 7. CPLP has experienced an increase in activity from the world's largest hedge funds lately. There were 3 hedge funds in our database with CPLP holdings at the end of June. Our calculations also showed that CPLP 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).

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.

Howard Marks OAKTREE CAPITAL MANAGEMENT
Howard Marks OAKTREE CAPITAL MANAGEMENT

Howard Marks of Oaktree Capital 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 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 review the fresh hedge fund action encompassing Capital Product Partners L.P. (NASDAQ:CPLP).

How are hedge funds trading Capital Product Partners L.P. (NASDAQ:CPLP)?

At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the second quarter of 2020. On the other hand, there were a total of 5 hedge funds with a bullish position in CPLP a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

Is CPLP A Good Stock To Buy?
Is CPLP A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Prelude Capital (previously Springbok Capital), managed by Gavin Saitowitz and Cisco J. del Valle, holds the number one position in Capital Product Partners L.P. (NASDAQ:CPLP). Prelude Capital (previously Springbok Capital) has a $0.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $0.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism encompass Ken Griffin's Citadel Investment Group, Howard Marks's Oaktree Capital Management and John Overdeck and David Siegel's Two Sigma Advisors. In terms of the portfolio weights assigned to each position Prelude Capital (previously Springbok Capital) allocated the biggest weight to Capital Product Partners L.P. (NASDAQ:CPLP), around 0.02% of its 13F portfolio. Oaktree Capital Management is also relatively very bullish on the stock, earmarking 0.0046 percent of its 13F equity portfolio to CPLP.

As industrywide interest jumped, key hedge funds were leading the bulls' herd. Prelude Capital (previously Springbok Capital), managed by Gavin Saitowitz and Cisco J. del Valle, assembled the most valuable position in Capital Product Partners L.P. (NASDAQ:CPLP). Prelude Capital (previously Springbok Capital) had $0.3 million invested in the company at the end of the quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Capital Product Partners L.P. (NASDAQ:CPLP) but similarly valued. We will take a look at Hawthorn Bancshares, Inc. (NASDAQ:HWBK), Energous Corporation (NASDAQ:WATT), BayCom Corp (NASDAQ:BCML), Oxford Square Capital Corp. (NASDAQ:OXSQ), Cidara Therapeutics Inc (NASDAQ:CDTX), Intellicheck Inc. (NASDAQ:IDN), and Security National Financial Corp. (NASDAQ:SNFCA). This group of stocks' market caps are closest to CPLP's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HWBK,1,1330,0 WATT,6,1511,-2 BCML,3,9470,-3 OXSQ,3,2094,1 CDTX,8,22230,2 IDN,1,226,-3 SNFCA,2,1583,0 Average,3.4,5492,-0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.4 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $1 million in CPLP's case. Cidara Therapeutics Inc (NASDAQ:CDTX) is the most popular stock in this table. On the other hand Hawthorn Bancshares, Inc. (NASDAQ:HWBK) is the least popular one with only 1 bullish hedge fund positions. Capital Product Partners L.P. (NASDAQ:CPLP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CPLP is 44.6. 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. 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 still beat the market by 16.1 percentage points. Hedge funds were also right about betting on CPLP as the stock returned 19.1% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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