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NGL Energy Partners LP (NGL): Are Hedge Funds Right About This Stock?

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After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards NGL Energy Partners LP (NYSE:NGL).

NGL Energy Partners LP (NYSE:NGL) was in 5 hedge funds' portfolios at the end of March. The all time high for this statistic is 8. NGL investors should pay attention to an increase in hedge fund interest of late. There were 2 hedge funds in our database with NGL positions at the end of the fourth quarter. Our calculations also showed that NGL isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the eyes of most investors, hedge funds are assumed to be slow, old financial vehicles of years past. While there are over 8000 funds trading at the moment, Our researchers hone in on the masters of this group, about 850 funds. These money managers administer the majority of all hedge funds' total capital, and by observing their unrivaled stock picks, Insider Monkey has unearthed many investment strategies that have historically exceeded the market. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Paul Marshall Marshall Wace
Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let's take a glance at the fresh hedge fund action regarding NGL Energy Partners LP (NYSE:NGL).

Do Hedge Funds Think NGL Is A Good Stock To Buy Now?

At first quarter's end, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 150% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in NGL a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Is NGL A Good Stock To Buy?
Is NGL A Good Stock To Buy?

More specifically, Marshall Wace LLP was the largest shareholder of NGL Energy Partners LP (NYSE:NGL), with a stake worth $2.9 million reported as of the end of March. Trailing Marshall Wace LLP was Prescott Group Capital Management, which amassed a stake valued at $1.8 million. JS Capital, Citadel Investment Group, and Citadel Investment Group 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 Prescott Group Capital Management allocated the biggest weight to NGL Energy Partners LP (NYSE:NGL), around 0.52% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to NGL.

As aggregate interest increased, key hedge funds were leading the bulls' herd. Prescott Group Capital Management, managed by Phil Frohlich, created the biggest position in NGL Energy Partners LP (NYSE:NGL). Prescott Group Capital Management had $1.8 million invested in the company at the end of the quarter. Jonathan Soros's JS Capital also made a $0.2 million investment in the stock during the quarter. The following funds were also among the new NGL investors: Ken Griffin's Citadel Investment Group and Ken Griffin's Citadel Investment Group.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as NGL Energy Partners LP (NYSE:NGL) but similarly valued. We will take a look at Northrim BanCorp, Inc. (NASDAQ:NRIM), Checkmate Pharmaceuticals, Inc. (NASDAQ:CMPI), DIRTT Environmental Solutions Ltd. (NASDAQ:DRTT), Americas Gold and Silver Corporation (NYSE:USAS), Express, Inc. (NYSE:EXPR), Willis Lease Finance Corporation (NASDAQ:WLFC), and KemPharm Inc (NASDAQ:KMPH). All of these stocks' market caps match NGL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NRIM,7,11997,-3 CMPI,2,22994,-1 DRTT,4,51002,-1 USAS,2,1586,-2 EXPR,12,52710,-2 WLFC,2,17083,0 KMPH,6,3923,6 Average,5,23042,-0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $5 million in NGL's case. Express, Inc. (NYSE:EXPR) is the most popular stock in this table. On the other hand Checkmate Pharmaceuticals, Inc. (NASDAQ:CMPI) is the least popular one with only 2 bullish hedge fund positions. NGL Energy Partners LP (NYSE:NGL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NGL is 41.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and beat the market by 6.1 percentage points. A small number of hedge funds were also right about betting on NGL, though not to the same extent, as the stock returned 6.4% since the end of Q1 (through June 18th) and outperformed the market.

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

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