Crestwood Equity Partners LP (CEQP): Are Hedge Funds Right About This Stock?

We at Insider Monkey have gone over 866 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 March 31st. In this article, we look at what those funds think of Crestwood Equity Partners LP (NYSE:CEQP) based on that data.

Is Crestwood Equity Partners LP (NYSE:CEQP) worth your attention right now? Investors who are in the know were becoming hopeful. The number of long hedge fund positions advanced by 3 lately. Crestwood Equity Partners LP (NYSE:CEQP) was in 5 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 9. Our calculations also showed that CEQP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 S&P 500 ETFs by 115 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 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.

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

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 review the recent hedge fund action regarding Crestwood Equity Partners LP (NYSE:CEQP).

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

At the end of March, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 150% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CEQP over the last 23 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

The largest stake in Crestwood Equity Partners LP (NYSE:CEQP) was held by Yaupon Capital, which reported holding $5.6 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $3.6 million position. Other investors bullish on the company included PEAK6 Capital Management, Citadel Investment Group, and RiverPark Advisors. In terms of the portfolio weights assigned to each position Yaupon Capital allocated the biggest weight to Crestwood Equity Partners LP (NYSE:CEQP), around 4.75% of its 13F portfolio. RiverPark Advisors is also relatively very bullish on the stock, setting aside 0.16 percent of its 13F equity portfolio to CEQP.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Yaupon Capital, managed by Steve Pattyn, assembled the biggest position in Crestwood Equity Partners LP (NYSE:CEQP). Yaupon Capital had $5.6 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $2.8 million investment in the stock during the quarter. The other funds with brand new CEQP positions are Ken Griffin’s Citadel Investment Group, Mitch Rubin’s RiverPark Advisors, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Crestwood Equity Partners LP (NYSE:CEQP) but similarly valued. We will take a look at Cavco Industries, Inc. (NASDAQ:CVCO), Bally’s Corporation (NYSE:BALY), NetScout Systems, Inc. (NASDAQ:NTCT), TPI Composites, Inc. (NASDAQ:TPIC), Sonic Automotive Inc (NYSE:SAH), Sandy Spring Bancorp Inc. (NASDAQ:SASR), and Eventbrite, Inc. (NYSE:EB). All of these stocks’ market caps are similar to CEQP’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $192 million. That figure was $9 million in CEQP’s case. Eventbrite, Inc. (NYSE:EB) is the most popular stock in this table. On the other hand NetScout Systems, Inc. (NASDAQ:NTCT) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Crestwood Equity Partners LP (NYSE:CEQP) is even less popular than NTCT. Our overall hedge fund sentiment score for CEQP is 24.7. 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 but managed to beat the market by 6.1 percentage points. A small number of hedge funds were also right about betting on CEQP, though not to the same extent, as the stock returned 10.2% since the end of March (through June 18th) and outperformed the market as well.

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