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Here’s What Hedge Funds Think About CNX Midstream Partners LP (CNXM)

Reymerlyn Martin

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of December 31st. In this article we look at what those investors think of CNX Midstream Partners LP (NYSE:CNXM).

CNX Midstream Partners LP (NYSE:CNXM) was in 6 hedge funds' portfolios at the end of the fourth quarter of 2018. CNXM shareholders have witnessed a decrease in enthusiasm from smart money recently. There were 9 hedge funds in our database with CNXM positions at the end of the previous quarter. Our calculations also showed that CNXM isn't among the 30 most popular stocks among hedge funds.

If you'd ask most investors, hedge funds are seen as unimportant, outdated financial vehicles of the past. While there are more than 8000 funds trading today, We look at the crème de la crème of this group, around 750 funds. These money managers control most of the smart money's total capital, and by watching their matchless investments, Insider Monkey has brought to light several investment strategies that have historically defeated Mr. Market. Insider Monkey's flagship hedge fund strategy outperformed the S&P 500 index by nearly 5 percentage points per year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

BP CAPITAL

We're going to view the fresh hedge fund action surrounding CNX Midstream Partners LP (NYSE:CNXM).

How have hedgies been trading CNX Midstream Partners LP (NYSE:CNXM)?

At the end of the fourth quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the previous quarter. On the other hand, there were a total of 3 hedge funds with a bullish position in CNXM a year ago. With hedgies' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

CNXM_apr2019

More specifically, Arrowstreet Capital was the largest shareholder of CNX Midstream Partners LP (NYSE:CNXM), with a stake worth $4.6 million reported as of the end of December. Trailing Arrowstreet Capital was BP Capital, which amassed a stake valued at $4 million. Prescott Group Capital Management, Driehaus Capital, and EJF Capital were also very fond of the stock, giving the stock large weights in their portfolios.

Judging by the fact that CNX Midstream Partners LP (NYSE:CNXM) has faced declining sentiment from the aggregate hedge fund industry, we can see that there is a sect of money managers who were dropping their full holdings heading into Q3. It's worth mentioning that Alec Litowitz and Ross Laser's Magnetar Capital sold off the biggest investment of the "upper crust" of funds followed by Insider Monkey, valued at about $13.9 million in stock, and Jim Simons's Renaissance Technologies was right behind this move, as the fund dropped about $4.8 million worth. These transactions are interesting, as total hedge fund interest dropped by 3 funds heading into Q3.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as CNX Midstream Partners LP (NYSE:CNXM) but similarly valued. These stocks are Lindsay Corporation (NYSE:LNN), Carrizo Oil & Gas, Inc. (NASDAQ:CRZO), ProPetro Holding Corp. (NYSE:PUMP), and Luminex Corporation (NASDAQ:LMNX). This group of stocks' market values match CNXM's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LNN,11,214015,3 CRZO,13,65343,-5 PUMP,20,160260,-1 LMNX,19,175259,3 Average,15.75,153719,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $154 million. That figure was $13 million in CNXM's case. ProPetro Holding Corp. (NYSE:PUMP) is the most popular stock in this table. On the other hand Lindsay Corporation (NYSE:LNN) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks CNX Midstream Partners LP (NYSE:CNXM) is even less popular than LNN. Hedge funds dodged a bullet by taking a bearish stance towards CNXM. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately CNXM wasn't nearly as popular as these 15 stock (hedge fund sentiment was very bearish); CNXM investors were disappointed as the stock returned 0.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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

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