The Insider Monkey team has completed processing the quarterly 13F filings for the June 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 CVR Partners LP (NYSE:UAN).
Is CVR Partners LP (NYSE:UAN) a good stock to buy now? Prominent investors are getting less bullish. The number of long hedge fund bets shrunk by 1 in recent months. Our calculations also showed that UAN isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to 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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike other investors who track every movement of the 25 largest hedge funds, our long-short investment strategy relies on hedge fund buy/sell signals given by the 100 best performing hedge funds. Let's take a peek at the fresh hedge fund action regarding CVR Partners LP (NYSE:UAN).
What have hedge funds been doing with CVR Partners LP (NYSE:UAN)?
At Q2's end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from one quarter earlier. On the other hand, there were a total of 2 hedge funds with a bullish position in UAN a year ago. So, let's see 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, Raging Capital Management, managed by William C. Martin, holds the largest position in CVR Partners LP (NYSE:UAN). Raging Capital Management has a $36.7 million position in the stock, comprising 6.2% of its 13F portfolio. The second most bullish fund manager is Matthew Barrett of Glendon Capital Management, with a $9.6 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Ken Griffin's Citadel Investment Group, and Renaissance Technologies .
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Arrowstreet Capital. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified UAN as a viable investment and initiated a position in the stock.
Let's now take a look at hedge fund activity in other stocks similar to CVR Partners LP (NYSE:UAN). We will take a look at American Software, Inc. (NASDAQ:AMSWA), American National BankShares Inc (NASDAQ:AMNB), Earthstone Energy, Inc. (NYSE:ESTE), and Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI). This group of stocks' market caps are closest to UAN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMSWA,6,45127,-5 AMNB,2,9707,0 ESTE,7,2987,0 ACBI,12,74782,0 Average,6.75,33151,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $46 million in UAN's case. Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) is the most popular stock in this table. On the other hand American National BankShares Inc (NASDAQ:AMNB) is the least popular one with only 2 bullish hedge fund positions. CVR Partners LP (NYSE:UAN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately UAN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); UAN investors were disappointed as the stock returned -1.7% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.